Skip to main content

tv   Fast Money  CNBC  July 9, 2019 5:00pm-6:00pm EDT

5:00 pm
responded. david marcus, the one who runs the division, saying they are eager to work with regulators, saying they want and need government central banks, regulators, nonprofits and stakeholders at the table and value the feedback they've received it is the beginning before we hear some testimony about libra next week. guys, back to you. >> thank you for that. we're out of time. that does it for "closing bell." >> "fast money" begins right now "fast money" starts right now. overlooking times square i'm melissa leer pete gentleman a jairan, tim seymour and guy adami are here shareholders have been left in the dust we have got the details. plus, boeing anding the day in the green despite deliveries dropping 37% for the first half of the year. is all of the bad news already priced into the stock? technician explains why he says buy boeing now first we start off with the make or break moments for the markets. that's right, all of wall street
5:01 pm
is bracing for two days of testimony from fed chair jerome powell on capitol hill along with the fed minutes, which will be released tomorrow it is all going down as the market hovers at record highs. so can powell deliver and is the fed about to spark another record rally guy? >> yes. >> why -- >> why eye of the tiger? why survivor >> that song is brutal. >> it is not brutal. >> you chose that, right >> it is who >> survivor. >> oh, yeah. >> i allow 10 seconds of needless chitchat. >> because we have to. we usually do 59 minutes >> guy, can you please. >> i thought the market is going to roll over for quite sometime. the question is can the fed say what the market needs to hear in order to have the rally continue the s&p 500 at all-time high, the vix has a 1500 and everyone feels confident that the rally will continue. i can't imagine what he could possibly say that would be any more dovish than they've been. it will be interesting
5:02 pm
he has to answer questions tomorrow, is that right? >> he does. >> the question is if i'm a senator or congressman. >> what would you ask? >> first question i would ask, the president talks about it being the greatest economy in the history of the public. he might be right. if that's the case, why are you considering lowering rates i got to tell you something, there's no way he has a good answer for that. >> he could say that inflation has not come. >> and my push back would be -- >> hold on, guy, can i ask you a question >> yeah. you know my senator corleony. >> i do think of a deleterious effect on the world let alone our economy for a long time, but do you think the economy right now relative to the times the fed has been in play does not deserve a fed cut? >> it is interesting i'm not the guy that says every other day it is the greatest economy ever people are -- what's the word he is looking for people are jealous of our economy and that we're the envy of the rest of the world so those are his words, not mine i happen to think the economy is slowing down, not only here but
5:03 pm
globally maybe, maybe it is the right thing to do. but i know what? the definition of an insanity is doing the same thing over again, hoping for a different reaction. that's what the fed is doing now. >> yeah, so what is different this time is here we are in the longest expansion in the last 100 years in the u.s., the one that you say every other major economy is jealous of. here is the issue. we had ten years of basically zero interest rates and now negative interest rates and we are talking about a fed -- a cut really soon after the latest raise, right, in december. we have a situation here where we will be cutting interest rates. fed fund rates have never been cut from this low of spot, you know, at this point. we are 2 1/4, two and a half, whatever it is, and when you look around the world and you start to say to yourself, oh, wait a minute, maybe it has been a rolling credit crisis for ten years, right so we came out of it quickly we're the ones who actually started raising rates quicker than everybody else. now we're all racing to cut 'em off of this levels to me that seems very dangerous and that's what is very
5:04 pm
different this time about a rate cut. if you are thinking that this is going to be positive for risk assets. >> i tell you what, you sound very bearish you sound like the last ten years, sort of that's a bearish tone in terms of how the market moved to the upside. i would say to you this, i'm looking right now and i think that powell and those guys are looking at the global economy as much as the u.s. economy, and maybe they shouldn't be but it is all part of how they're viewing this thing i think it is part of -- did they make a mistake in december? i think most of the desk would say probably they did. so are they going to make up for it now and do this cut >> take it back. >> they most likely will. >> if everybody is so convinced a cut in december was a massive problem -- >> it was a raise, right >> a raise i have heard for days and days strategists and economists come on here and say a 25-basis point is not going to do anything for the economy, just taking back what we did in december. why is it a priority i don't get it. >> you are bringing up the point which is where we are. people are not sure the fed
5:05 pm
needs to do more than 25 basis points and if so where are equities relative to the move, where they probably priced in 50, in fact probably priced in 75 for the 2020. as i said yesterday on the show, more feds as in not necessarily more hikes or cuts, but more headlines out of the fed over the next two weeks from powell, between a fed meeting next week that obviously this all rests on it is hard to feel that equities are in a place where they can rally more. >> right and then we're going to get earning season between now and the next -- >> bingo >> -- fed being already 80% of s&p 500 companies preannounced what did we hear from baf yesterday? >> not good, after the bell in germany. >> not good. blaming the weakness in the auto market, blaming the china trade issue here in terms of the weakness then we had pepsi today, sugar water company, right >> sugar water, right. >> pretty good quarter what did it do it was down a percent on the day. >> but it had a huge move. >> that's my point with the markets at or close to
5:06 pm
record highs and take company reports earnings that are good, doesn't raise the guidance, what do you get you get softness. >> you get a little bit of softness. >> right. >> you get a bit of pull back. but we watched the situations happen. >> what are the earnings season -- >> i think we have to look at it this way, mel. we have been in this rotational market for a long time i don't know how many times we sat on the desk and said the feng trade is pulling us to the upside energy started pulling us to the upside not many amongst ago. so there's been different aspects of the market that continue to pull the market up towards and now at the highs it is just a matter of -- i think pepsi, if you are up 20-plus percent in a company like pepsi year-to-date, i don't know what their delivery had to have been to get them a little higher. >> that's exactly my point. >> right but i think there are other places that people could rotate to that haven't made that move you know, quite frankly in the same world coke had a decent year but nothing close to what pepsi has done so far. other names out there i think could rotation. >> i think rotation is a great
5:07 pm
thing. but also to your point, yes, you have to deliver -- not only do you have to deliver this quarter, i think your guidance has to be more than just strong. it has to be outstanding i don't think we're going to hear that. it is interesting, you know, the fed can do a lot of things, but when your opponent -- and i view the rest of the world as our opponent i'm sort of in trump's camp. but if your opponent is weakening themselves, don't weaken yourself along with them. step on their neck and stepping on their neck doesn't mean lowering rates along with them i'm probably one of the only people in the world that thinks that. >> hold on a second. central banks don't act that way. >> you have an opportunity now -- >> it is not -- >> -- to strengthen the u.s. economy -- >> a full something. >> -- strengthening is not lowering rates in my opinion it is jimmy snooker who you are looking for. >> super fly. >> i would be fed chair snooka. >> they don't know what they want we were with kudlow this morning half asleep talking about -- >> what do you mean? >> he's in for the strong dollar. >> this is not what the white house thinks i thought it was a pathetic
5:08 pm
performance today. the guy was half asleep, low energy everything he said is at odds with what is coming out of the president's twitter account. >> did you hear what he said about powell's job being safe? i was going to say is it more of a negative than a positive when he says that >> i think people are looking at the market with some sense of extremes about to be upon us based upon where we came from. people wonder whether we have another december up our sleeve when nothing fundamentally has changed since december other than a fed that obviously made a radical pivot. if the fed is not your friend in the next couple of weeks where we get all of the feds, investors are wondering whether there's a major draw down. the market in front of us has earnings that will be weaker, the market knows it, and it knows in the context of bond yields 70 basis points lower that has a lot to do with equities are that's the big question. >> yeah. >> you know who would be a great guest at this point? >> jay-z, not the one married to
5:09 pm
beyo beyoncé. >> it would be great if he were here. >> as investors eagerly await jerome powell's testimony tomorrow, another guest says don't get excited. the market usually gets it wrong. let's bring in jay z. >> he likes the nickname, you can tell. >> general jay z.. jay z. owes you. you say a 10 or 15% correction from here is realistic >> i think so. >> what is going to precipitate that in your view? >> it is that markets are more dovish on central make policy than the fed is. the markets went from five months ago pricing in two hikes as of last week pricing in three cuts you know that the market is always bad when it comes to predicting both the magnitude and timing of fed actions. why should this time be nip different? you have markets that are up over 20% in the last six months on anticipation of an aggressive
5:10 pm
rate cut path, and yet i don't think growth is nearly weak enough to justify it nor is inflation necessarily weak enough to justify that aggressive level of cutting. so you have a mismatch between what the market expects -- really aggressive cuts -- and i think what the fed will deliver, which will be something less i think it will create volatility and down side for equities over the course of the next six months. >> it is clear there's been a vast disparity in terms of what the market seemed to be expecting and what the fed seems ready to do, but very recently the markets have recalibrated quickly as well to be fair to the markets. when we got the jobs data we saw fed funds future recalibrate very quickly 50 was off the table, 100% for july i'm not sure where they stand at this moment in time. but let's say we get the july cut, isn't that what the markets want after that it is -- who knows? it is whatever jerome powell sort of jaw bones and that disparity doesn't exist. >> i don't think it will be enough though. they will get 25 basis points
5:11 pm
most likely in july, but then they will want more. and you have to think about the combination of earnings and interest rates, right? we started talking about earnings a minute ago because we're in earnings season, and what a lot of people are overlooking is the fact earnings have been incredibly weak. the first quarter they were awful, basically down 40 basis points on a year over year basis. second quarter earnings don't look much better you don't have earnings growth and you had a market that wanted more aggressive fed cuts but they're not going to quite get it in other words i think we're set up for some down side. what is interesting is the relationship 2009 the mark relationship between the market and fed is turned on its head from what you normally expect. if you look at every fed cycle going back to 1950s you find normally the market is flat in the six months leading to first cut because the markets are sniffing out weakness or problems so equities are generally flat leading to the first fed cut in the six months it is up 12% 12 months later it is up 20% we are up 20% coming into the first cut.
5:12 pm
in other words the market has already done all of the work they expect the fed to do. where do we go from here >> jay z., that's important and part of the discussion we were having is it the tina situation, is it because rates are so low and we're contemplating a cut off such a low base that equity -- money had to go into equities? you understand what i mean >> sure. >> i think we're speaking in a language that sets up for a dangerous situation in my opinion. the point is i think they're trying to put lipstick on a pig and saying it is an insurance cut but really it feels it is the start of a rate cutting cycle, especially when you consider what is going on with sovereign debt around the world. >> yes i think it is just an insurance cut. if it is just a one and done, then there's nothing but down side for the markets because the markets are sniffing out problems that i don't think exist. what the market is saying is there's no inflation because there's no inflation you have to cut aggressively if you look at the components of inflation for a second, look at core cpi, and that's cpi minus food and energy, the single largest component of core cpi at 60% is housing if you look at rental vacancy
5:13 pm
rates, they're at the lowest levels we have seen since the 1980s, and the -- call it the stock of single family homes, at the lowest levels we've seen since the '90s in other words you have real tight housing markets, and that leads to upward pricing pressure that's point number one. the other 40% of core cpi are things that could be impacted by tariffs. you saw that type of -- you saw those comments coming out of the ism survey where companies across many different industries were talking about supply chain problems and higher input costs. so in other words a market that says, hey, there's no inflation out there, all of a sudden you look at the biggest components of it and you think, well, you know, maybe there could be, which means the fed is not cutting. >> simple yes or no, isn't a 10 or 15% correction of the markets by definition going to bring in more fed >> that's a good question. we've seen this sort of like fed put. if we go back to where we were at the beginning of the year, i don't know, it could very well
5:14 pm
be, but i don't think we get an insurance cut when we're up 20% year to day. i think you bring up a good point. if we get a 15% to 20% correction, you get a panic in the market it probably brings it back on the table. which, by the way, if you are looking at this over the course of the next six months i would view that as an opportunity, because i think what's clear is that this is not the end of the cycle. so if you do get that downturn and you get that panic, i would lean in to cyclical sectors, i would lean in to tech, industrials, i would lean into credit and things like that because we're not looking at the end of an expansion here we're 121 months and counting and we could go a lot longer in my opinion. >> joe, great to see you thank you. >> jay-z. >> the original. why confuse people. >> that's what we do on this show it is the cheapest thing to do, right, pete? >> you're right. >> that's so right. >> you asked that question because you think that the fed would step in? >> well, the fed we know will absolutely step in there i would also say that, yeah, i
5:15 pm
know the market is up 20% from guess but it was down 20%. so you get a place it is hard to know the world that we live in but look at telk i me but look at tech, look at amazon people say we haven't he seen rotation and the old leaders are not in play, i mean they're in play amazon we have not talked on the show in a long time and in fact it is right there. >> the argument for a cut, the president and a lot of people make is that, yeah, we have strong jobs however no inflation. you heard jay z. just now, inplace is in a inflation is in the wrong place. be careful what you wish for melissa lee. >> did i wish for anything >> just saying in general. >> i know what you're wishing for. >> saying once the genie is out of the bottle, i'm talking about the inflation genie, the party is over. >> that's ridiculous people have been saying that since 2009 and it has not happened. >> just saying. >> there are so many factors in
5:16 pm
play relative to last cycles where we saw inflation become a problem, look at your point -- >> a lot of technology -- >> -- deflation is at issue. >> look at japan, that's what ear 'fighting. >> gene ie or no genie. >> check out levi. wall street ceos are making big bucks while shareholders are left in the dust and it has one of our traders sounding the alarm. we'll explain. later, more boeing fall-out as deliveries drop sharply but one top technician says the worst is over for the aerospace giant. he will tell us what has him pressing buy much more "fast money" right after this your brain is an amazing thing. but as you get older, it naturally begins to change,
5:17 pm
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.
5:18 pm
we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands!
5:19 pm
check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. welcome back to "fast money" financials have been lagging, the broader markets over the last year. while it might hurt investors' pockets, the company ceos have been laughing all the way to the bank according to the "wall street journal", jeffrey richard handler more than doubled his paycheck in 2018 while jeffrey's shareholders saw a 15% drop. jamie diamond, james gorman, larry fink, michael corbach all
5:20 pm
cashing in as their stock sunk as well. will high pay, low returns hurt these financials >> it is certainly a case of going into kind of the glory years for bank with 2003 through 2008 where financial engineering almost sunk these guys where they were well paid and zero accountability when we talk about banks as an asset class, i think that people are maligning the banks as a group, dan, as -- i'm just kidding. >> no, you're not though. >> well, i don't think you are. >> here is the point here -- >> anyway. >> xlf as a group underperformed by 100 basis points this year despite what happened with the yield curve and all of the pressure in terms of negative interest rate. i think ceos need to be -- i think shareholders of the company need to hold ceos accountable to the profitability of the company now and five years in the future. whether we changed that, it was the big issue for the banks. >> i think what is disappointing is obviously a lot of u.s. banks got bailed out, they would have gone out of business and the ceos would have been out on
5:21 pm
their butts like the tens of thousands of employees. >> like we would have been. >> what is going on now is a shame, we are overbank as a country still and we will continue to see consolidation. i think it is important do remember deutsche bank will be firing people and they won't find jobs again. it seems as people are replaced, it seems the people at the top, the one that got the real bailouts ten years ago are the ones that their pay skips higher. >> i would like to argue that side because when i hear you say that, jamie diamond is one of the only guys left who was there before the financial crisis, through the financial crisis you look at the banks and it is all new guys corbett was there. >> they were all there. >> they were there but not the guy in charge, not the ceo in charge of everything so because of that i think you have to look at it differently you have to look at what have these guys had to do in a completely different environment than their predecessors had going into the financial crisis. >> all they had to do was sit on their hands. that's all they had to do. >> there's more than that. they had to hire different
5:22 pm
positions. >> when? >> regulatory deals -- >> jp morgan, last time i checked, aren't they at record profitability? they've never been more profitage. >> i will say this divides amongst people that believe the stock prices reflect the value of the franchise and the people that believe the stock prices do not reflect the value of the franchise, right they're somehow under value -- not fully appreciated in the marketplace. you think that the base are terrible. >> banks are valued for taking risks they didn't understand. >> that's true. >> i think it is important to remember as recently as 2012 there were tempests in tea pots in some of the banks there's a situation or has been for years where some of the people running the places who are paid tens of millions of dollars a year do not know what is going on as far as risk taking. >> dan is rather exercised that tempest in a tea pot, that's a shakespeare thing, right? don't look at my quizzically, please. >> i'm just wondering where you're going. >> kbided is should the ceo pay
5:23 pm
be linked to stock performance 679 i don't think any of us want that, you want it the opposite you could be in a position to make the stock go higher and then get paid. so i don't think you want that in terms of the banks, citi is going to report in about a week, i think on the 15th of july. it is a stock that when it gets to the levels in terms of price of tangible book it is a little ahead of itself. you will see it will be either side of 60, $66. this stock should be trading closer to 70 than 80. >> check out shares of t-mobile. the stock is jumping after hours on news it will replace red hat effective mon, july 15th this is after red hat closed its deal with ibm today. you see the shares up about 2.6% obviously a big question is will the sprint/t-mobile deal go through. we are supposed to hear about that later in the week what do you think, dan >> i think it should go through. when you think of what they have between verizon and at&t, and the way they're stacking up
5:24 pm
assets, these are two wireless assets coming together you need a much stronger number three player in the market and it will make it a more competitive environment. >> earlier this year when there was news of this deal -- it happened on this show i believe and t-mobile went down, traded down to the low 60s, we had a conversation this is the wrong reaction we talked about john ledger sort of being the man and what he has done with that company over the last few years now you wake up today and this stock is either side of $75, probably higher now. people were knocking on valuation. when you compare it to its peers it is ridiculous but they probably deserve it. >> i'm melissa lee you're watching "fast money" on cnbc world w50id here is what else is coming up on "fast." well, it is one small step for man as rich and branson's space company plans to go private, but we will tell you why it might be a giant leap for investors. plus, check out this dow downer.
5:25 pm
the stock is getting crushed this year and you won't believe where one top technician thinks it is heading next there's much more "fast money" right after this so are you feeling? on a scale of one to five? one to five? it's more like five million. there's everything from happy to extremely happy. there's also angry. i'm really angry clive! actually, really angry. thank you. but what if your business could understand what your customers are feeling... and then do something about it. turn problems into opportunities. thanks drone. customers into fanatics change the whole experience. alright who wants to go again? i do! i do! i have a really good feeling about this.
5:26 pm
5:27 pm
>> welcome back to "fast money". boeing ending the day in the green despite deliveries dropping sharply in the first half of the year as its best-selling plane sits on the runway phil lebeau at chicago burro with more on this. >> reporter: because the 737 max is grounded, melissa, we saw the same thing for the third straight month which boeing announced june orders and deliveries for the month of june there were no max orders. third straight month we've seen that the backlog dropped by three planes, though it is still at about 4,400. in terms of deliveries, the first half number is from boeing
5:28 pm
relative to where they were in the first half of last year and the year before. huge fall-off in 737 deliveries. by the way, they're still delivering some 737 ngs but because they're not delivering maxes that's why the numbers are far lower. take a look at shares of airbus. i point this out because airbus announced its orders and deliveries for june in the first half today, and here is something people have not heard in a long time airbus is on pace to deliver more commercial airplanes than boeing for the first time in seven years. if they continue through the rest of the year at the current pace, especially with the a320, at the pace of deliveries, they will outpace boeing in that regard quickly look at shares of boeing remember, it reports earnings later this month and the focus right now, 737 max production schedule guys, if it holds at 42, most analysts believe this stock is likely while under pressure to stay in that 345 to 360 range. if they cut production again,
5:29 pm
that's when people believe the stock takes another step lower >> phil, would it be safe to say or is it fair to say that airbus has won orders on the back of boeing's problems? initially when the whole thing happened the argument was it is hard to move the orders and lose the orders to airbus because the backlog is so long. >> i'm not sure they won a lot of orders. for the month of june, yes, there was some month for a-320 or a-320 geo not a huge number of them. this is a segment that has nor the most part been filled out over the next four to six years, so it is not like you have a lot of airlines sitting there saying, i need these planes, i need to place a big order right now. most airlines that want it have already placed thatrd onne order that said, airbus is in position where it can fill some slots right now. maybe it is a couple of years
5:30 pm
down the road. those are slots that boeing would like to fill but with the max grounded it is tough right now. >> thank you, phil lebeau in chicago. is the action showing that the worse is over for boeing pete, what do you say? >> i kept waiting for the moment where we would see the stock get close to 300 and we haven't seen that it got to 330 and it bounces back up. i have watched the implied volatility of the options because my theory on the whole thing was if it gets near 300 i would like to buy the stock, start selling calls against it with a large implied volatility. we don't have that anymore the volatility has been sucked out of boeing, despite the fact that the 737 is still grounded their delivery numbers, all of the numbers today were absolutely awful phil was talking about that. airbus obviously is i think taking a little something -- and maybe one thing phil might be missing is the more opportunity for airbus some get in there, the better opportunity for them. that does hurt boeing eventually how long does this actually grounding of the 737 and lack of orders for that, that could be something that could be really
5:31 pm
impactful down the line for boeing. >> our next guest says the skies are clear for takeoff for boeing after a turbulent first half todd over at the plasma. what are you looking at, todd gordon. >> let's look at the industrials before we get into the technicals of boeing, boeing being the biggest kpoent ent of xli. we have certainly a cautionary tale here in xli xli up here you can see struggling to move on to the 200-day moving margin where the broader markets are doing fine with it. here is the problem. this is xli divided into spx over here. if this one is dropping, it means the first is weakening against the second one, which of course is the s&p. clearly there's been massive performance in industrial. again, boeing being the largest component that's an issue. so obviously we've seen a huge run-up here in boeing. we have begun to consolidate but, again, i will draw your attention down to the lower ratio here
5:32 pm
you are seeing under performance of boeing against xli. so xli underperforming xpx, boeing underperforming xli that's a bit of an issue before we flip off the screen, i was listening to pete's levels back there if you look at the depth of prior corrections here, i'll highlight them -- i don't want to flip charts here so i won't hit clear. if you look at prior corrections, you are talking about 30%, 27%, 25% and, again, 25%. we should hold, if we counterbalance, if we go below a 30% depth, that's about the 310 level in boeing. if you break below 310 you will have counter balanced all prior corrections and perhaps you're not in a correction anymore. if you are looking to pick up shares i would watch that 310 level in boeing. so that's the weekly in boeing let's look at another one that's really dragged the xli down, which is, of course, 3m. same kind of concept relative strength of xli into 3m, we have 3m massively
5:33 pm
underperforming the xli. no surprise there. this is a weekly chart this is not even a daily chart you can see it is the 200-week moving average which i really like you can see we have broken below it where the broader market has no problem saying above the average price the last 200 weeks. this is the weekly drop down to the daily here. again, this is a nasty kind of drop below the 200-day we came up gapped through the 200-day we're coming back to retest. if you want to be a short selling, if you want to try to hedge, maybe stocks above that 200-day and then, again, look at how many 3m is underperforming the xli which, again, is under performing the xpx certainly weighing on the broader markets. >> thank you, todd todd gordon with trading >> would any of you buy 3m >> no. this is not in a vacuum. this has been under performing for a while. down 30 something percent and the analyst comes out and finally downgrades the stock better late than never good for him or her.
5:34 pm
boeing quickly, can we >> we should. >> pete made great points. i will say this. last quarter $22 billion in revenue. everybody thinks takes commercial airline company and it is but it is only half their revenue. there's a $6 billion defense aspect that i think the market is mispricing quite frankly. go back to last kwarpt earp. it wasn't a disaster they stopped buying back stock, i get it no more guidance, i get it you are talking about a company valuation wise that hasn't been at these levels maybe ever, but i understand some of the headwinds and some of the unknowns by i think the stock is a buy right here. >> i agree with your assessment of the company business. i will say hunter kay who is probably one of the best on this plane manufacturer downgraded today basically 30 bucks a share. roughly half was due to max being grounded he said 2 million a month equals to 78 billion. but also it is going to retard some of the other initiatives they have like the nma. >> yes. >> which is a major -- which was going to be a major acretion
5:35 pm
going forward. you have to think about the downgrades continuing to trickle in a bit on boeing. >> coming up, check out the bad jeans. i'm not talking about tim. >> so good that is very good. >> actually, they're all right newly public company levi falling apart at the seams after the company's earnings report. we will bring you the latest sir richard branson taking virgin galactic public we will tell you what it means and if the space stock could see out of this world returns. more "fast money" still ahead. (gentle music)
5:36 pm
- my degree from snhu has helped me tremendously. the flexible class schedules allow me to go to work full-time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we, at southern new hampshire university, are the ones who succeed. we are the ones who break through.
5:37 pm
5:38 pm
welcome back to "fast money" we've got an earnings alert on denim retailer lee vow straws. courtn courtn courtney reagan is back with this. >> profit was hits by negative impacts and higher expenses and cost of growing consumer business it came in better than expectations despite according to ceo a, quote, challenging retail macro network environment. sales grew in all geographic regions across mens, womens, tops and bottoms
5:39 pm
sales in asia were up 6%, 3% in the americas levi's direct to consumer business increased 9%. a whole sale business, through department stores, up 3%, too. women's is a key growth area, a smaller business than men's. the total category grew 16% in the quarter, more than twice that of the larger men's business growth. now, gross margin did contract slightly from last year, slargly due to the unfavorable currency impact that drag was partially offset by less discounted sales levi is working hard to market its cool, reflected in expenses, but at least it paid off at coachella. >> in the second quarter we again dominated coachella as the go-to uniform for festival season with levi's 501 cut-off shorts, up more than 50% this quarter taking center stage. >> reporter: he also said it sells a graphic tee shirt every second levi plans to open nearly 100 new of its own stores in this
5:40 pm
fiscal year. melissa, back to you. >> all right, courtney thank you. courtney reagan back at headquarters what do you make of the results, guy? >> it is a valuation thing to me it trades close to 21 times let's say next year's earnings that to me in this space is expensive. i don't think you have the eps -- listen, i love my levis i have my 501s when i was in high school. i will tell you my size if you want to buy me a par 34/32. >> 32? come on. >> seems like elongated. >> 30 though, he is stretching those legs out a lot. >> oh, he's overstating the leg length. >> what i like most about what they're doing is they're investing in the direct-to-consumer they had three different areas they talk about china, they talk about women, they talk about direct-to-consumer they're investing in those we see the women's brand starting to work better for them 16% growth she was talking about. it seems to me it came down to a currency issue you know what? the earnings are still there i know at 20 times it sound like
5:41 pm
a lot. i don't know if i agree with that because they have the revenue growth, guy, and in the last quarter all of the different regions they continued to grow a little bit, because of that i'm intrigued by this. $17 on the ipo, i think down near 20 i would buy this stock. >> i don't get this. the company attributed the lower income versus expectations to the $29 million cost associated with the ipo in march and higher advertising. >> right. >> costs i have never heard that from an ipo out of the gate, that we are missing estimates because of the cost of our ipo. >> and if that's the case, then, you know, it could also be -- could it be a cost of the banking related to it too? the bottom line is that should be one off, not something that bothers you. i mean outside of guy switching from wranglers -- >> i never had wranglers. >> i'm a 501 guy. >> levis, levis. >> but, again, up double digits in every consumer demographic, emerging market, india, brazil, it is the story for the company. it goes back to why a lot of people were chasing the
5:42 pm
demographics a long time ago in emerging markets levi is there. >> still ahead, to infinity and beyond branson taking virgin galactic public will this be the next frontier for investing? ples, the ultimate big box battle they soar this year but nothing compared to where one trader sees these stocks heading. we have the details after the break.
5:43 pm
5:44 pm
5:45 pm
welcome back to "fast money" sir richard branson's space tours and venture virgin galactic planning to go public after merging with social investment company both were on "squawk box" where i asked how virgin galactic compares to a company like tesla. here is what he said. >> we have to remember when tesla went public i think it was a two odd billion dollar market cap. now it is 10x in ten years if we are lucky to have the same trajectory and the same customer love i think that we would all look back and say we've done something absolutely fantastic in human technology. >> so should investors jump into the billion jaaire space race?
5:46 pm
>> i remember when musk was bringing the company public. now it has a $40 billion market cap, $25 billion in sales, you know, nine years later it is pretty interesting when you think about this -- i know one of the parts of the conversation was the total addressable market for space in ten years or something there are estimates between low single digit billions and 20 billion or something like that if you are thinking about how you invest in the public markets and having access to something that really shouldn't be public, it is a merger that ultimately will be a public company, they have access to him and he has been an amazing investor for the last years in the private markets and richard branson who has been doing it for years, it is an interesting way to say, you know what, i will put a small amount of capital into the thing and let it run if you had done it in tesla in 2010, '11, '12, you would have been happy. >> virgin galactic are taking deposits from customers for a trip in space that will happen later on when they get the
5:47 pm
rockets and ships going, et cetera, they eventually want to move to mass market to bring the cost of space travel down to a greater audience, like the model 3 for tesla. i mean -- >> it is fantastic. >> you're smiling because -- >> i mean it is not my thing. >> you see yourself going to space? >> no, i have no interest. i don't want to join the space force or get on the virgin galactic things. i will tell you started this block again, how do you go back to playing this ipo. where are we right now i ask you the easy questions, you ask me the harder. >> the exchanges. >> you do, wise guy. nasdaq made an all-time high today if you look. it is 18 times forward earnings, not expensive. >> not where we were going with this. >> they reported july 25th that's not true, dan! she said how do you make money in the ipo frenzy, that's how you do it and i said it for a while! >> look, as an investor you should be chasing a-plus management teams with a b product, and that's how will do
5:48 pm
well if you get an a product that's better richard branson has proven to be an a-plus manager. it is that simple. it is hard to believe he will be overly sensational on something he spent a lot of time in. if anything, i think he undersold a lot of his stuff i mean as in he has not been a hype machine even though he is a great marketing spokesman for his companies. >> i couldn't agree more when we do the power pitch over there by the plasma, i start with management. that truly is always where you start. when you are looking across to your point, i mean richard branson as good as they get. whatever you want to say about elon musk, this guy is something special. now, a lot of people dislike the way he goes, whatever, but he is something special. so i think you look for those kinds of people. if you have got growth, you can get past some of the warts that might exist, for at least a little while i think that's what we're looking alt-right n looking at right now. >> i thought one of the most interesting thing is he is putting up his own money
5:49 pm
really interesting they raised 6, $700 million, whatever, to do this deal. this will be one way companies can go public. we saw slack go public through a direct listing. >> right. >> then we saw the pin stres, the lyfts and ubers. it is interesting. a lot of ways to get to the public markets now i don't know what it is telling you, but it is interesting for the investors who have liked the innovation and are locked out. >> i hope our landlord was listening. >> 100% religiously. stacey cunningham watches too. >> richard branson is watching. >> a big fan. >> do the big box breakouts have more room to run live at the sdnaaq in times square much more "fast money" still ahead. ♪ ild deployed, having a reliable network means everything. so, when i get a video chat, and i get to see their face, it's the best thing in the world. and i've earned every one of these gray hairs.
5:50 pm
military moms, we serve too. (vo) the network more people rely on, gives you more. like military plans with a special price on unlimited, $100 per line, and big savings on our best phones when you switch. that's verizon.
5:51 pm
5:52 pm
>> welcome brack to "fast money" check out shares of walmart and costco hitting all-time highs today as the big box boom continues to build steam the big box stores are the cream of the retail trade crop this year with costco, target, walmart, home depot up more than 20% in 2019. do these names have more room to run, tim >> well, i tell you what, based upon all we have laid out there and our set up for the market, it is that consumer staples and essentially some of the discretionary but big box, look,
5:53 pm
i don't like walmart in fact, relative to that i love home depot i think home depot has a significant mode around it their professional services are going to mitigate some of the margin pressure that will be coming from the tariff wars. look, let's be clear it is a place where people have been running for cover based upon the expectations of the economy. >> yes. >> i don't know but i don't feel the same way about running for cover. i think they look at somebody like target and say look at the growth and the pe of the company. it is a fraction of what you are looking at with walmart. i agree with walmart i think people are looking at the companies and they've fallen in love with the idea they can compete and go head-to-head and win with amazon. i think that's the part that -- you know what? that's the part i think that makes it interesting to me i think costco is another one of those. it trades a little bit more expensive, but the fact they've got the money always coming in, it is a company that continues to work well and they can fight on the internet if they have to, although they don't have to compete there as much. >> but he mentioned the costco. >> yes. >> earlier this spring --
5:54 pm
>> carter braxton worth. >> not tony braxton, carter braxton worth. >> right. >> when the stock was 248, the market if you recall was rolling over and costco was hanging in there right around at the time all-time highs he said the stock would break out. we agreed on the desk. said valuation is expensive but the stock performance was telling you will something we wake up today, it is 270 and i think it is going to go higher from here. >> we added two more names to the all-time high list with the options marketing betting cops coand walmart will not be the only big box heavyweights breaking records one trader is betting millions of dollars they know which might be next. mike khouw, what are you looking at >> pete just mentioned it and probably one of the names he was looking at because target saw well-above average call volume today. it is the second time we've seen one of the big trades and somebody was rolling from the july 8, '21/2 calls which are now in the money out to the january 2020 92 1/2 calls, about 6,000 of those traded though
5:55 pm
2020 calls were going for about $4.50. that puts the break even on the trade around $97 and a little over six months time up about 10% from where the stock is currently trading. to pete's point, the thing is trading for a little less than 15 times earnings, over the last ten years it is about the historical multiple. if you take a look even net of tariff wars at the earnings estimates for target going forward, we are looking at about a 7% increase year on year most of the expected growth in the stock price here wouldn't be coming necessarily from multiple expansion. most would actually be coming from earnings growth. >> is that what you were looking at >> i saw that trade as well today. i like what i saw there. >> yeah. >> actually i added calls. i was already long stock and i have a buy right position on there but i bought calls as well looking for upside because of all of those, that was huge i didn't want to go as far, i didn't want to go to 2020 and i didn't want to go that far up so i brought it in a little closer in terms of strikes and time. >> mike khouw in san francisco, thank. check out thfue ll show friday
5:56 pm
at 5:30 p.m. eastern time. up next, final trade "options action" sponsored by think or swim by td ameritrade 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. ♪
5:57 pm
5:58 pm
it's time for the final trade. let's go around the horns.
5:59 pm
pete najarian. >> earlier in the show we were talking about ceos and banks particularly and are they overpaid and everything else i think citi is ready to make the move to the upside i bought the stock today i think it is going higher. >> nice. tim. >> pete and i tag teaming, to use -- >> nice. >> -- the wrestling lexicon. i'm going jp morgan. first of all it is a company that will return 40 billion to shareholders over the next calendar 12 months by the way, last three-quarters effectively at record profitability. i don't understand the problem there. >> are you going to say sell j.p. morgan? >> i had a little wrifrnkle on h trade. i think the regional banking index, it is one of the worst looking charts it acts so poorly. >> i know the chart, dan. >> this thing is a disaster. we will do it tomorrow or later on in the week. >> all right. >> it looks horrible it is the life blood of the economy. they can't get going here. i don't like it. >> basically you are saying you are selling these two guys positions.
6:00 pm
guy. >> gorilla monsoon was a tag team remember the gorilla >> no. >> he was great. american dreams. >> twitter reports at the end of the month had a nice day today i believe the stock sets up well into earnings, melissa. >> does it for us. see you back here motorrow for my himission is simple to mk you money. i'm here to level the playing field for all investors. there is always a bull market somewhere and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends, i'm trying to make you money. my job is not just to entertain but educate and teach you. tweet me @jimcramer. this market threw a curveball dow dipping and s&p gaining and


info Stream Only

Uploaded by TV Archive on