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tv   Fast Money  CNBC  February 26, 2019 5:00pm-6:00pm EST

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while and restoere a little bit of the buying energy. >> we've got the fed chair in front of the house tomorrow. we've got the north korea summit between trump and leader there we've got michael cohen testifying, more earnings. it's a busy week ahead of us. >> there's headlines but it seems like the market has baked in the fed. >> ge just dropped its 10k >> we're out of time here on "closing bell. "fast money" begins right now. "live from the nasdaq market site i'm melissa lee tonight on "fast," the powell pause continues. and now stocks are pausing along with him we will tell you the one thing the fed chair said that had all of wall street talking. plus two dow downers home depot and caterpillar getting crushed today but for very different reasons. first we start off with tesla's twitter trauma stop me if you've heard this before elon musk in hot water as one of
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his most recent tweets has him warring with the s.e.c. yet again. the stock taking a hit early in the day but recovering and closing just below $300 a share. let's get straight to phil lebeau in chicago with all the details. >> let's bring you up to speed today a judge in new york issued a ruling saying that elon mucsk has until march 11th to explain to the court why he should not be held in contempt of court what does tesla the company or the board of directors have to say about what's happened the last 48 hours? it's been crickets we have heard from elon musk somebody on twitter said, look, the stock moved lower on the s.e.c. contempt of court filing than it did on your tweet on february 19th. he wrote back on twitter exactly. this has now happened several times. something is broken with s.e.c. oversight. as for the s.e.c., it stands by its filing last night. no further comment today that filing saying that elon
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musk should be held in contempt of court because he violated the agreement that he signed back in october which said that all of his financial communications, anything regarding anything material or could be material to investors would be preapproved oh, and by the way, in their filing they also made note of the fact that elon musk when he was talking with "60 minutes" back in december issued this kind of commentary about whether or not his tweets are approved >> have you had any of your tweets censored since the settlement >> no. >> none. does someone have to read them before they go out >> no. >> so your tweets are not supervised >> the only tweets that would have to be reviewed would be if a tweet had a probability of causing movement in the stock. >> and that's it >> yeah. otherwise it's hello, first amendment. freedom of speech is fund mental. >> how do they know that it's going to move the market if they're not reading all of them
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before you sending th them. >> take a look at shares of tesla. in the filing last night the s.e.c. says tesla told them, yeah, the initial tweet on the evening of the february 19th about whether production would hit 500,000 vehicles, that was not preapproved. however, they later huddled with elon musk and issued a corrective tweet or tweet with a correction and say really what i meant to say was 400,000 would be the production for 2019 one last thing, melissa. i get a lot of people asking me why isn't there an exec ucutive some with the board of directors standing up and saying we're going to take control of this situation. that has not happened since elon musk has been running this company. i'm not sure why people would expect it to happen in this case this is elon musk's company. he has shown since he started this company that it moves to his drum beat. in other words, you will hear people say an executive should stand up and say this is
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outrageous, we're going to take control of the situation or i'm going to be in charge of the situation. name one time that has happened. it just has not happened over the history of tesla with elon musk. >> phil, when elon musk came back onto twitter, i think it was today or maybe last night and he said, hey, the s.e.c. apparently didn't read the earnings call transcribed, in which case he had said 300,000 to 500,000. >> right. >> could it be construed that maybe this wasn't material information in so much as it had been released to the public at another point in time? >> right and this is probably the argument you'll hear from legal ko counsel. he said i misquoted, it should have been 400,000. you hear people on social media saying the s.e.c. is overreacting the fact of the matter is the
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s.e.c., and the reason they're trying to hold him in contempt of court, he violated the terms of the agreement the agreement that all of his financial communications would be preapproved that is at the heart of the s.e.c. complaint not whether or not it's an egregious statement that he made on twitter, but whether or not the process was violated. >> do you have a question, karen? >> yeah. phil, on the spectrum of what contempt could mean, what is the range of penalties that they could be facing? >> i've talked to a few people today and all of them have said the same thing look, the s.e.c., if they really, really wanted to throw the book at elon musk and tesla could go to the judge and say, look, we had an agreement, he clearly violated he thumbs his nose at us on "60 minutes" throw the book at him, kick him out of the ceo suite. nobody thinks that will happen more likely is that the s.e.c. is going to look to work with tesla to say, look, we gave you
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a chance in our opinion he violated it. so now we've got to come up with some way of ensuring that this doesn't happen again how that is worked out, that remains to be seen. >> phil, thank you phil lebeau covering a very thorny story today so the question is why did the stock basically finish flat? guy, should investors care >> yeah, they should. >> at this point is it all in the stock, this wild card of elon musk going rogue? >> it's interesting. a couple of things i think he views authority figures and authority groups with utter contempt. he thinks he's so much smarter and he probably is there's a part of me that thinks he's doing this because he doesn't want to be ceo anymore he finding the minutia of the job boring and below his pay grade. maybe the best thing to happen to tesla is he does get pounce -- bounced from the ceo spot. to answer your question, yeah, the stock traded pretty well it had every opportunity to
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trade down to 280 and stay there and it didn't do that. so you find yourself in the bottom quarter of a range it's been in the last couple of years. maybe for the first time it's taken fire on the long side and makes sense. >> part of the reason that you're an investor in tesla is because elon musk is going rogue. he's going rogue on electric vehicles, on the decarbonization of the electric grid you're in it because this guy is a change maker that said, if you take him out of the ceo role, he's still going to tweet this is going to happen. he's proven it he doesn't care about those rules. so investors in this, number one, need to know that this is going to happen. number two, need to understand that you're betting on somebody who doesn't want to follow the rules and is going to break the rules. that is to me why tesla is valuable and why the stock didn't go down today >> hold on a second. first of all, since when has the stock price reflected reality, okay if you think that the stock price should be trading on
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fundamentals, then this stock should be at a very different level and you know where i think it's going to be. >> but the reaction to the initial s.e.c. investigation, i mean that was a pronounced move in the stock, right? i agree with you in some respects, but in terms of the reaction to elon musk going rogue on twitter, the stock has certainly reacted in the past. >> it has. i'm not going to try to tell you -- give you a psycho analysis, but it does not reflect liquidity and that's the most important thing it doesn't reflect liquidity in the underlying stock and more importantly it doesn't reflect solvency of the company or fundamentals in terms of where production is going and doesn't affect the valuation and it never has. think about the last couple of months three of the biggest investors cut their positions in half. you've got a short interest that's massive that obviously on some level will keep this stock afloat i am of the view that if this stock has major problems, they
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will happen with the stock price at a very inflated number, not at a much lower number i don't think the stock price means anything. >> well, i think that clearly they have come to the public markets and used the public markets. they like all the benefits of public markets but elon musk doesn't want to live by the rules of public markets. therefore, this should not be a public company i really believe that. he is a change maker, he is a genius he's clearly not a guy that likes to play.the rules. we don't know the board hasn't tried to rein in him. >> so why haven't they resigned then if i'm a board member, this guy is dangerous he's running roughshod on sgler everybody. >> it's probably a pretty cool thing to be on the tesla board i'm surprised we haven't seen some resign. >> i would think the d & o
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insurance would be as high as any company in the world. >> i think his first amendment argument is ridiculous when you have a public company with public securities that you can tweet whatever you want because it's a first amendment thing, that's absurd maybe this valuation there isn't -- there isn't a private market deal to be done but i think they should do it. >> if they can if they can. let's say obviously whatever goes on with elon musk at this point, it's just another reason for the bears to not like the stock. but if you're a bull on tesla, is this reason for concern in your view, guy is this a reason why the stock should maybe trade in a range, be discounted and rerated because there should be a discount embedded in the stock because of the wild card elon musk may present >> you absolutely should be concerned if you're a bull maybe i didn't make my point clear. the price action today was encouragin encouraging. the market had every opportunity
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to take this stock to the woodshed it tried earlier and it was unsuccessful so the fact that it did close unchanged, i understand it's just a day, that's encouraging and the bull thesis, you're right. but that's been the case since you bought the stock at any period of time. >> i think it's not is he going to tweet crazy stuff because he is, we've seen it multiple times. the question is, is his ceoness ever going to be at stake? it doesn't seem like it like this if he leaves, i think the stock will fall a lot. >> how far is he willing to push it how far is he willing to go? a and how far is the s.e.c. willing to push back if there is a ruling that he has to leave as ceo, i think that would be a negative for the stock. i would buy the stock because i think elon musk is going to be there. if he's not there, to tim's poing point, the valuations aren't
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great, there's so many problems with it. >> another stock on the move, twitter down 3%. what did jack dorsey tell our friend, kara swisher, on twitter. >> go. >> he said basically that elon musk is one of the most exciting twitter users out there. so if elon musk gets a muzzle, if people start feeling that they need to be muzzled some way on twitter if twitter can be a weapon of self-destruction, what happens to twitter i don't know what was behind this move today. >> that's interesting, melissa again, this sounds to me like now we're giving elon musk a lot more credit. you know, he's the reason why twitter's valuation is the way that it is that's almost as absurd as tesla's valuation. so i hear you and i do think his tweets are the subject of enormous speculation, laughter, horror, you tell me.
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but when i think about it, twitter responding because i think twitter would have a much bigger issue if the president stopped tweeting rather than elon musk. the reason twitter is such a great platform, this is happening in realtime. there's a lot of really smart people doing a lot of work on tesla than a lot of the people that own the stock i bet most of the retail investors that own the stock haven't even read the 10k. but the people on twitter follow this stock really closely and that's interesting. >> the people who have done the most work are probably the people playing it from the short side that have been frustrated for the last couple of years because it's not at the price they think it should be trading at with that said, i think the sell-off in twitter today, if -- that's overdone. i think they took their medicine, twitter. i think going forward that's going to help them a great deal. so if you're asking to sum up
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this conversation. i think tesla traded well. chris harvey will be here to explain why he is changing his tune and saying this market rally is going to roll on. plus, it's a big cat call. ubs out with a double downgrade on the stock to a sell rating. are we really witnessing peak cat? the traders will weigh in. home depot just the latest company to announce the latest buyback. could a buyback bubble be brewing? much more "fast money" after this rebekkah: opioids has taken everything
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and everyone i've ever loved away from me. everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning.
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fed chair powell faces the new democratic majority.
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welcome back we've got a news alert on general electric let's get to morgan brennan for all the details. >> hey, melissa. general electric did just drop its 10k filing with the s.e.c. also larry culp, ceo and chairman of ge, his first annual letter to ge shareholders. we're still combing through all of the materials here, but some of the tidbits that do stand out especially in that letter saying that the company intends to
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maintain a disciplined financial policy targeting a sustainable credit rating in the single a range. ge industrial leverage of 2.5 times net debt to ebidta and ultimately and ultimately a dividend level in line with our peers. you'll recall the company has slashed the dividend two times it's down to a quarterly dividend of a penny. no details on when that could potentially happen just to hear documents like that marks a shift from what we've seen for this company in the last couple of years as it tries to turn itself around. also cul pchlp talking about th looking to change and revise and streamline their reporting process. going through the 10k i haven't seen any more updates or details in some of those investigations with regulators either, but for now looking at the materials, the fact that they are ultimately targeting a dividend in line with peers is the thing that really stands out also worth noting, next week
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we'll get a so-called teach-in on the insurance business within ge capital and the following week on the 14th of march we expect an updated outlook for this company for 2014 and beyond we're not getting any of those types of numbers either. >> another headline coming out is they completed a 2018 review of the legacy insurance business, which dovetails with what morgan had said in terms of the dividend, they just cut that in october there's only been one payout of a penny. for them to cut it and turn around two months later and say, hey, we're going to think about it but there's no time frame about restoring it in line with peers. >> i don't get that really i also question in line with peers. who are their peers? what are the businesses they're going to be in we kind of have a big idea of it but maybe that's not what ends up happening it's sort of free for the ceo to leave the dividend on a penny,
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work on the other stuff, work on the balance sheet. i don't get it. >> restoring confidence at ge takes manydifferent forms. one of the forms is certainly the balance sheet and some sense of solvency and certainty. that's what ge always had for people that's why he talks about a dividend someday they also just filed a shelf offering registration for a potential mixed shelf. we don't know what it is and don't know the size. good news, not bad news, good snie news at the same time, he's talking about very saying things four clear business lines. so there was nothing extraordinary here either way, but it plays on the same themes of predictability, of a company that's getting back to a conservative approach to running their core businesses. outside of paying a div, i agree you don't need to do that. i don't think there's anything wrong telling people we want to be there again. >> but they're taking the eye off the ball and saying some day we want to do this dividend.
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it doesn't give me any more predictability in fact, wait a second, they just sold a unit maybe they're going back to their old ways i agree with karen, why do this now? just wait until you can actually pay it and then do it. >> because that's what i saw, 4:58 ge miles mixed security shelf so the stock closed at 10.65. if they had done the same announcement two and a half months agoish, i think the market would have treated this much differently so to tim's point, i think maybe they feel they're on much firmer ground that they're able to do something like that and play from strength sunset of weakness i look at that as a good sign. getting back to the conversation we had yesterday, what is ge now? it's a power company and they have still major issues to address in those businesses clearly they're trying to, but selling that health care unit for $21 billion, which was great, by the way, probably a lot more than they thought, that's fantastic, but what are you left with and that's what
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they have to come to grips with. >> so are you more certain to buy ge -- >> i'm long. i have leaps of 20. >> do you feel better about the stock at 10.66 versus 6.66, its low. >> yes, i do ge debt is really a concern and the debt markets were seizing up if they needed to access them, that would have been a problem for ge it's much better now. >> in december ge was one of those names we weren't talking about. so i think it's a much better time in terms of the credit profile of the company with enormous issues that everyone here is talking about still ahead of them. but i think a hard focus on returning to austerity in a way that's not going choke it off. i know they can't have it both ways, but i like what i hear. cat getting scratched today after a rare double downgrade from ubs the traders will weigh in. i'm melissa lee. you're watching "fast money" on
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cnbc in the meantime, here's what else is coming up on "fast." >> this is a good time to be patient. >> and those are the words wall street loves to hear from federal reserve chair jerome powell but there's something else he said that caught the attention of our traders. plus -- it's a monster mash of monster buybacks. home depot just the latest in a line of companies doubling down on its own stock but we'll tell you why there could be a buyback bubble brewing. much more "fast money" still ahead.
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that's what happens in golf nothiand in life.ily.
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i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley. welcome back to "fast money. patient powell strikes again our senior economic reporter
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steve liesman is standing by in the newsroom with all the details. >> fed chairman jerome powell offering a generally dovish outlook on policy. didn't close the door entirely on another rate hike this year but emphasized the fed is in a wait-and-see mode. >> the committee has decided that with our policy rate in the range of neutral, with muted inflation pressures and some of the downside risks we've talked about, this is a good time to be patient and watch and wait and see how the situation evolves. >> so if it sounds like he said that before, it's because he has. powell stuck very closely to words from his january fed meeting and the press conference when the fed pivoted from a policy of gradual increases to a policy of patience powell offered an optimistic view on the u.s. economy but the headwinds he was talking about were foreign and domestic, saying they have clouded the outlook. powell suggested he didn't see any threat from the economy running out of workers the economy is drawing in workers from the sidelines,
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lessening any inflation threat day two of powell's testimony is tomorrow in front of the house that could be more contentious with several new committee members, especially on the house side, that have their own agenda >> steve, you emphasized patience when it comes to describing powell. what came to my minding initially was political. i read this article on about how many times powell went to capitol hill and visited lawmakers, a total of 98 times, which was four times as many as yellen did in her first year in office i just sort of wonder if he's got the message in terms of the pivot, in terms of the pause, in terms of being patient from listening to these politicians >> wow, how many ps can you get into in a single sentence? >> i tried to pack them in. >> that was pretty impressive. well, first of all, that's great work that ylan mui did looking at the agenda and the calendar
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of chairman powell look, this is something that actually powell thought he needed to take care of when he first took office. he thought both yellen and bernanke had not done as good a job of taking care of congress as they should have. and i think he saw the writing on the wall with this particular president, because i think he expected the president might one of these days criticize powell and what the fed knows and what the fed thinks is they're beholden to congress congress is the one that writes the checks, creates the federal reserve act, and that's what they have to take care of. taking care of -- the president doesn't matter as much as if he has trouble in congress, so that was from day one we'll see, melissa, by the way, tomorrow when he sits in front of the house how much some of that politicking may or may not have helped him. >> steve, thank you. steve liesman back at headquarters so this is exactly what the markets wanted, right?
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right? pause? >> let's be clear. arguably the most important thing that's happened to markets in the last six months that is obviously ahead of the trade war. so yes, i think the fact that the fed also is allowing inflation to be defined differently, which allows them when they have to respond -- let's be clear, i think they still tilt to a hawkishness. we could still get a hike this year i'm not saying it's going to happen right away. but this allows the reaction effect for them to be perfect. they can say inflation is, yeah, we want it higher. >> i think they have left the building i think they are gone until somewhereless around the world -- they can't just keep hiking now and have the dollar get stronger i think until somebody else is out there to help, i don't think they're going to do anything i think the markets sort of like it you know, the president likes it not that they should care about that but i think they are gone unless something extremely dramatic happens. >> unfortunately, that's probably true. you know, if you think about it, as citizens of this country, we should want a stronger u.s.
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dollar when i say the fed wassing to the right thing in october, maybe it wasn't the right thing for the markets but it was in my opinion the right thing for the economy going forward. at some point you have to take your medicine. i think this was a fed chair that realized that and was trying to go down that road until the market called him on it so effectively in my world now the fed can never move because the market will always call the fed on it and the fed will have to back down that to me is a real problem. >> but that is good for the market >> absolutely. whether you agree with it or not, it's good for the market. look at what's going on, real estate, iyr, one of the better performing etfs out there. why? because the fed will be lower for longer it could all go sideways in the ending, but for the federal reserve right now, it's good for the market. >> our next guest says with the fed on pause, the market rally will roll on so why is wall street's biggest bear sounding so bullish let's welcome back chris harvey, wells fargo securities head of equity strategy.
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now, when we say biggest bear, your end target is 26, 065 so why do you think the market is going higher. >> we set that price target in december we set that because we thought the fed made a mistake the fed came out and admitted they made a mistake. as we go forward, we pushed up our risk premium very, very high the fed has said we're on hold they may halt. we might not see another hike again or any time soon that said, we have to bring that down in addition to that, what's happened we were going into a sentiment recession. that all changed at the beginning of the year when the fed did a 180. why they did a 180 is not clear to me but they did a 180 and that's the most important thing. then the fear of yield curve inverting ended. ceos are all saying things are
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good donald trump is slow walking trade and tariff into the pack half of the year because that in theory will help him get re-elected and help global economies. so what you're looking at, what you're seeing is much more improvement and underlying fundamentals that are relatively strong with lower interest rates. >> okay. you came out with a note today also going overweight semi conductors, which is maybe one of the most cyclical parts of the u.s. stock market. so all in all you sound a lot more bullish than what 2,665 would seem to indicate it's just a matter of time before you ratchet that higher do you think that we ending the year higher? >> we're going to put in interest rates, credit spreads and risk premium we know that interest rates have come down. we know that credit spreads have come down. we know the risk premium cannot go higher and we're at up with 66 on s&p earnings we're at the low end of the range. so we put that altogether and
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are reviewing it really our biggest call has been and the biggest change for us has been moving from quality into value that's part of why we're upgrading semis at this point in time we find a lot of value in the semi space we think what you want to do is buy the things that have a lot of value, where expectations have come down and people aren't there just yet. >> chris, let's talk about semis. you're not alone very good company in terms of your whole view and how things have changed, but semis have just rallied 25% there's nobody out there saying earnings are about to grow there's nobody out there saying we're going to see an acceleration in the global economy in 2019. >> okay. so we've been underweight semis the last year and a half, almost two years. the last year they have underperformed software and underperformed significantly if you look at expectations, expectations have come down. if you look at positioning, the consensus overweight is
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software, it's not semis yes, they bounce but a lot of other things have bounced too. furthermore, we've been positive on cyclicals we've liked the capital goods space. we're just getting a little bit more cyclical exposure and try to play that value trade. >> chris, i'm curious, the fed has spoken a lot about price level target and main getting inflation above 2% how does that factor into your analysis of the market >> so a lot of our clients are afraid the fed will hike again we tell them if they hike again, what's the environment look like if you look at inflation expectations, they have to be higher if you look at the economy, that has to be higher to a certain degree you might have to have trade and tariff maybe not resolved but much further along. so when they raise, it's likely the s&p will be at a higher level. >> chris, thank you. chris harvey at wells fargo. >> again, tim made the point the
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smh has gone from 80ish to wo n 104.5. it topped out this time last year around 114. so i wonder how much room is left to the upside i think there's a chance you get there. but a lot of these stocks have had tremendous moves in a short period of time so i would worry about that. the buyback boom showing no signs of slowing as home depot announces a $15 billion share repurchase are these monster buybacks creating a massive bubble? we'll explain. plus ubs out with a major and that sent the stock siin one trader says fear not because cat could have another life.
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welcome back to "fast money. home depot announces a $15 billion stock repurchase. >> fed chairman jay powell side stepped a verbal hand grenade in his congressional testimony when asked where he stood on the recent trial balloons to restrict the ability of corporations to buy back stock powell reflected for a moment and then said the allocation of capital has always been left to the private sector and, quote, i
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would want to understand the consequences of changing that. it was a perfect answer to a politically divisive question. after pobuying back more than $0 billion in 2018, a record year, corporations have shown no signs of slowing back with the buybacks in 2019 already we've seen $190 billion in announced buy backs today home depot announced a i buyback. after the bell gap announced a $1 billion buyback program as well they follow on cisco, aig, foot locker, csx and many other corporations the home depot buyback is a very large one but part of a pattern that goes back many years. nearly 80 companies in the s&p 500 have reduced their share count by at least 25% since 2010 this is a class of corporations i call buyback monsters, including well-known names like
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lowe's and gap and ibm and apple. is this a bubble that's about to burst? well, it's unlikely as long as two conditions are prevalent first, that corporations continue to generate excess cash flow that is used to buy back stock. and second, that interest rates remain low, which would enable an alternative way to buy back stock and that's by borrowing. this is the hornet's nest that powell stepped into. so the fed and indeed the congress should understand the congress of changing that, as powell said, before stepping in and dictating to corporate america how it should be spending its profits this is going to be a big issue in the next two years. back to you. >> bob pisani at the new york stock exchange i'm glad the fed chairman actually said we have to understand the consequences of doing this before we actually do this in terms of the dangers. in this environment why would we be worried interest rates are so low. >> well, if you lever up to do a buyback, that's one thing.
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>> maybe you can't service your debt. >> but we have companies who have very modest amounts of debt where the buyback is not in any way hurting the balance sheet. i don't know, to me that's a disciplined thing to do. it doesn't seem to be a crazy thing to do. you've seen empire builders who are like no way i'm giving that money back to shareholders, i'm going to go buy some stuff i think it's a disciplined thing to do. i like when i have companies that buy back stock. >> this is definitely not the case with home depot, but the criticism is there are companies that are buying back stock and can't even fund their own pension. >> i think that's debt that's not serviced. >> so ultimately this is a liability for the company. you have to look at their balance sheet and understand a funded pension or not. but ultimately who bears the brunt? the taxpayers bear the brunt of all this the argument is that the buybacks are enhanced because guys took tax cuts and especially during a trade war
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got really scared and decided to throw it onto their balance sheet. >> or look at ibm and think maybe they could have done something with their money. >> most companies do it well you either -- it's really simple either you believe that the private sector can allocate capital the best or you believe that the public sector can at this point in time we live in a semi capitalist economy where it means private sector allocates best we've grown a massive economy off of that. to change that i think is outrageous that doesn't mean that pensions shouldn't be funded. doesn't mean that we don't have problems with it but in terms of having the government tell you how to allocate capital, it's a recipe for disaster. >> i don't think anybody would be advocating that when you take a look at ibm and see them buying back stock and they have done this all this time and their stock has gone south anyway, buybacks don't solve all corporate problems. >> i'll say this quickly
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one of the many unintended consequences of a fed being overly accommodative for a decade it's made many corporations' governance lazy. they're not focused on their company. it's stock specific but it's a problem. >> buy back stock, please. >> from buybacks to beds and baths and beyond this stock has rallied a whopping 46% this year one trader is betting more than $1 million that the lemon seller is about to get put through the wash mike khouw is with us from san francisco with the options action hey, mike. >> hi there. yeah, we did see a big and unusual trade in bed, bath and beyond today we saw someone buy 19,000 of the may 14 puts. they spent 67 cents per contract times 100 so that's $67 per contract times 19,000. that represents just under 2 million shares they're makinga potentially bearish bet that the stock could fall as much as 20% by may expiration i think they're targeting earnings which they announce on
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april 10th it has moved an average of 18% over the last five quarters they report. >> mike khouw, thanks for that for more on big box and home depot, tune into "mad money" tonight. jim is breaking down the big box retailer. still ahead on "fast," gw pharma soaring after seeing triple-digit revenue growth last quarter. 'lbrg wel inyou the very latest on that stock when "fast money" returns. see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade
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welcome back to "fast money. cat gets scratched shares of caterpillar falling today after a double downgrade from buy to a sell over at ubs it's our call of the day the firm cutting the price target down to $125 a share saying it expects more than half of cat's end markets to peak this year. are we witnessing peak cat, tim? >> well, i would make an argument that cat was declawed in 2018 when we knew that those markets were peaking in 2019 so to come out and tell me right now, by the way, those markets are going to peak in 2019, no real surprise. for a company who's trading around 11 times multiple when
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two years ago it was trading 15, 16 times, i think you've gotten a lot of this, you know, cat scratch fever, if i may, out of the way. so, no, i don't -- i'm not going to jump in and buy a stock that's essentially trading in the bottom third of the valuation for the last 52 weeks. i think a lot of bad news is priced in. >> you would think that ubs, the downgrader, is privy to the same information we all are. >> or maybe even more information. >> what do we talk about almost every -- the china deal. >> china deal. >> and we say if there's a china deal. >> poster child of the trade war. >> ubs knows that. so the fact that they come out with this double downgrade they go from buy to sell they skip the whole hold thing, good for them by the way, they had to take that into consideration. so you have to ask yourself this, do they think a deal is not happening? and if there is a deal are they saying it's all priced in
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already. to tim's point maybe the growth isn't as robust as we think it is. >> could that make you think, hmm, if it's priced into cat's stock, the poster child of the trade war, then how about the rest of the market have they priced it in >> exactly they're talking about effectively the rest of the world slowing down, right? so if you actually buy into that thesis, then you really shouldn't be long stocks at all, right? unless you think the fed will come to your rescue, which they probably will at some point, but they're not going to here. so this is a bigger call than just cat in my view. they're making a call on the global economy here. if you think it's slowing down, that is not great for stocks. >> karen. >> totally agree it is very much a macro call it seems like there's other bangs for your buck. there's a good one boeing, you've got to think there's downside there if -- i think there will be a deal so i'm long. >> feels like trying to herd cats. >> every night. still ahead, gw pharma soaring after its earnings
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report that stock is now up more than 70% this year. we'll tell you what's got investors so excited we're live at the nasdaq in times square much more "fast money" still ahead. - i think the best company's succeed as a team
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gw pharma. that stock jumping after hours let's get to seema mody for all the details. >> gw pharma stock soaring its epidilex product, for patients with epilepsy which contains a purified drug substance derived from marijuana launched in the u.s. in addition to its u.s. launch it's looking forward to a positive regulatory decision in europe in the next few months so international expansion is part of the story here. gw shares up about 30% in the past year and up 9% in extended trade. me liss melissa, back to you. >> seema mody, thank you guy, you power pitched this. >> it's when you go over to the smart board and talk about you pouch pitch something. >> this show is called "fast
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mun munne. >> look, the stock has gone from 100 to 170, back to 100 and here we are at 165 or so. it's been a tremendous move in a short period of time but, and tim has forgotten more about this than i'll know, but the tailwinds in the space are real this is a real company yes, valuation clearly a ridiculous concern however, when you have the tailwinds they have and now all of a sudden the science behind it that proves it and we had a conversation similar last night and dan nathan, who poo-poos all the time, i'm sure he's watching right now, you can't argue with the science. in the end science wins which is why i think it goes higher from here. >> so it's up 70% year to date which tells you what that tailwind is for the entire sector the good news is there's 3.4 million people suffering from epilepsy in this country and this is something where you're starting to see the insurance market be able to actually cover this drug. you're seeing that so 10% of this is medicare, 45 is medicaid and the other 45% is all
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commercial express scripts is allowing people to get paid through this formulary. that's great news for the company. clearly there's some fda catalysts in the year ahead, and i think this company right now on the science side remains so far ahead of everybody because of their ability to work with the fda. >> what's the number on epilepsy >> 3.4 million. >> this is for a particular rare form of epilepsy, specifically in children, so the market is much smaller do you feel like because there's sort of a -- there's not many stocks that you can express a view that cannabis is going to be a major player in pharma, that this is maybe the only way and therefore it's a higher bid to it? >> no doubt about it when people want to play medical pharma, they play this you're right, a third of the patients with epilepsy are the ones that will be benefitting from this. but the point is people are looking for the science, and these guys continue to show that science and research applied diligently with the fda gets
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approvals and that's going to happen with many companies to come. >> we wear these things inside our ears it's called an ifb i know what it stands for. it allows us to hear when the people back in englewood cliffs are saying the crack staff just informed me that we power pitched this sucker back in august 2017 that's quite a long time ago. >> 2017? >> yeah. where was it then? >> it was significantly lower than it is now i think the stock is up some 50ish% but great josh by the staff getting it done like that. >> great job with the fast pitch, power pitch. b. and great job explaining an if >> not so great. up next, final trades. help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives.
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time for the final trade tim. >> my friend karen says if you go home long a stock it's the same thing as buying it. so gw pharma are great numbers, i stay long. >> i think the fed will keep a steep curve. good for the fed buy ra. >> karen. >> home depot today. i guess the bar was pretty high. i thought those earnings were good a little disappointment from the street but the company is great, the outlook is great i like the valuation here. if rates are low, i think rates are good
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home depot. >> guy adami. >> a spirited, spirited show this evening, well anchored by you. wynn resorts they had some bad news, stock is trading well that is in my world a tell, mel. >> that does it for us see you back here tomorrow at 5:00 don't go mad money starts now welcome. my job is to put it in context call me or tweet me. some of you may have been discouraged, discouraged when fed chief said that the risks and comm


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