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

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>> it was only a slight gain but wasn't risk off. materials tech leading the way. >> exactly i think -- it was a mix but a good one so i don't think it was much of an issue in terms of risk appetite at this point. >> we're out of time here. just time to show the christmas tree outside which will be lit in moments from now, all 65 feet we are out of time that's the christmas tree does it for "closing bell." >> "fast money" begins right now. >> all right live from the nasdaq market site over looking times square this is "fast money. i'm scott woman ner if for melissa lee. tim seymour, dan nathan karen finerman and guy adami tonight on fast a roller coaster stock but one technician has picks no matter which way the market heads plus a trio newly public companies on the move. will the results help the once hot stocks regain glory? the desk breaks down the numbers. and eyes on jobs investors awaiting the
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employment report for november can we break the recent trend of slowing growth but we start with tesla, a boost after hours after morgan stanley prays raised price target on the stock from 440 to eye, sr. $500. 50% higheren than where it ended on the day pb guy what do you make of it. >> adam john as -- i don't know this to be the case but read going now. i think he is saying the bull case, the price target he raises from 450 to 500. but i don't think he is changing the current price target i guess it doesn't matter. the bottom line is this. he says the potential surge and sentiment through the first half of 2020, the $500 is doable. but i'm not certain they are changing the price target. with that said it's a stock you have to trade. i'll say it gwen, the move from basically 275 to 325, 330 in a straight line in october i think we have to revisit that. rarely do you see a stock have a day move like that and not
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revisit at. >> you mean trade it rather than. >> absolutely. >> rather than own it. >> 100%. and the market moves suggest that i'm mot saying i've done it correctly by any means but i say this is a stock that doesn't go up in a straight line not down in a straight line. and i think at this point i'd rather sell it here than own it here. >> well, here is what i say about adam john as and the call on tesla over the years. what i like about the way he handled the stock is he looked at both balance sheet issues and the upside and long-term kind of terminal value of the core things a lot of people get excited about tesla. when adam got cautious about 12 months ago and definitely cautious six months ago front and center around the balance sheet. he looked at the cap x getting cut. a lot of the places they were reeling back in spending i think he looked at growth dynamics, the balance sheet dynamics, looked at the converts out there. a big of the maturities out there. and said these are big issues.
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he must have more confidence out of the last quarter. as you heard me say many times, one quarter is not enough. >> let's do this i have the note in front of me let's make a couple of things clear. number one this is the bull case to 500. >> right which is part of the roll. >> his base case remains unchanged. >> 250. >> with a price target of 250. >> and that's the point i was trying to make at the top of the show. >> this is not adam jonas going stratospheric tonight simply saying the bull case may be stronger than i thought. >> to tie a ribbon about what i was assessing with how adam jonas handled the stock and had him on the show multiple times, the 250 reflects concern on free cash flow and profitability and balance sheet issues i think until we get that that as you know has been my call >> stock is up what 60 some odd% in three months. that's a lot. >> it's a lot. i think, so he has the blended -- i think the bear case is actually higher because the extent of the bear case is they
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are running out of money with the stock here they can raise all kinds of money easily. so you'd have to -- you have to say that bear case is a little bit less. >> why do you think they are not. >> they don't think they need it. >> based upon the last quarter maybe they don't that's a quick turn around but that's will that's fair. >> i think it's important to remember it's had the massive run off the lows, 50% or something like that still unchanged on the year. sitting in the middle of the massive range over the last 12 months and hasn't made progress. i think that's a big part of the bear story in this thing is over the last four or five years it's not really done anything, especially relative to the market here. you know, listen, i look at that note and i say database a great auto analyst he is skeptical of whether or not this is an auto company or not. they cheerily have the disproportionate market in the ev market in north america now he says what does it look like in china? i don't think that if you're incorporating orders, 100 kick starter orders for the cyber truck that might or night not be
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built in a couple of years, i just don't see how that should factor into the current view on the stock. but what he is doing here is say egg that if i'm wrong on the base case scenario it could be 12 x my target and that's fine. listen, again to your point, tim. i think he is introducing a lot of important fundamental concepts you how you value the company and where it could go to the upside or downside. >> and the think frustrating with florida is people look at five years down the road and say it's a great story in five years. that's the criticism -- good for adam been on tour and in the tesla model. >> that's the only way the story works,right? is you have to look out five years or however long. >> you sound skeptical. >> no but i'm simply saying it's the only way you can justify paying up for a stock like this is believing in the longer term story. >> i know. i think that's. >> all right because you know. >> of course. >> right. >> based on what's happening
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today, it's ludicrous. >> yes. >> based on what may happen five years from now is the question >> yeah. well and -- but how appropriate is that? and do analyst treat this stock differently than other stocks? they certainly treat it different than other auto stocks i guess it's not an auto company. that's what we know. >> if you are an auto analyst looking at gm which is the big one in the coverage, a $50 oh bhl market company with 130 stagnant sales and looking at tesla says 60 billion-dollar market cap we know they were losing on each car they make and expected to do $25 billion in sales. for it to grow to the values they have to be such a big winner in the next 50 years of automotive everything for it to really to make sense that's i guess the easy one for the bear to say that's not likely. >> let's do breaking news. brian sullivan in vienna following the opec meeting there. we want to get to him with the latest, brian. >> yeah, hey, scott, a bit
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chaotic here the meeting wrapped. iran left did come back. i said that might happen they leave show frustration then come back. the meeting actually wrapped we don't know if they have a deal president or not. that's the question but the uuae oil minister left and we are expecting more ministers to lead and we are expecting perhaps the saudi oil minister, the son of the king abdul aziz bin salman -- i can hear the report give me a moment we'll see who it is. and try to get some more color and perhaps a comment. there is a lot of activity among the reporters who have been here more than 12 hours today waiting for something. they cancelled the press conference cancelled the media scrum.
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i'm going to see if we can't do something here hold on. it's okay. yes. hold on, guys. i just lost ifb. >> open the door >> here comes the saudi minister now. let's go this way. >> okay. hold on guys i lost ifb. stand by he is going to come by you can see the scrum around him. this is abdul aziz bin salman. >> for cnbc, any comments, sir hold on any comments, sir for cnbc, your excellency. >> are we come back? was there a deal done, sir was there a deal done. >> he said well he did look at us and said guys we will see you tomorrow i don't know what that means about the deal i know there is the opec plus meeting with russia tomorrow quite chaotic here guys. no word if a deal is done.
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but the meeting is done. and we will see you back here from the live coverage at opec headquarters tomorrow. we are throwing up slaepg bags and grab brat wurst and call it a night here. >> we appreciate that very much. brian sufrlen live on the scene, the opec meeting breaking up you saw the scene there. i don't want to ask him a question in case he can't hear me oil is frozen maybe waiting to find out what the ultimate outcome is going to be tomorrow, not much move today in either wti or brent. >> no but interesting because you had not only aramco which people feel has given decent support. you have had inventory numbers that have been bullish ipi and eia data the were key. the key is what extent do they extend deep ner 20 but cut to 19.5 to 19.6 barrels i think if you look at where supply demand dynamics in the
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are right now they need to get through the middle part of next year because there is a glut online oil prices are right now are as high as they've been since the aramco targets were bombed over the summers. that's impressive into the meeting. >> we are literally looking at what could be the worst trade of the last decade counting down the final days of this one. >> for sure. >> does anybody think that energy is going to be place to be in 2020. >> for trades absolutely listen exxon is 66 wsh 6.50 the low in december we bounced appropriated there recently some people came out said 50% upside next omp slumber ge looks interesting off these levels analysts will upgrade them are they sustainable probably not but for trades slumber ge is up in in the last two weeks. >> i think you can get more. >> obviously a lot of leverage
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look at the xle 43% is the chevronen a exxon. xl sechlt a series of lower highs the last six or seven months the nice bounce in the mid-50s but you see weakness in oil you have the xle going down led by the integrated and it's a washout for a while. those were great trades some of the drillers off the lows. i know there were other more levered napped names those are trades the chevron and exxon are salesen rallies. >> let's say we got a boost in oil. there is a lot of supply waiting to come on i wonder how much of a sustained rally do we see when the supply demand dahm might be off. >> it's hard to make a bet with any conviction not knowing where growth is going to be next year either we're up in the air globally on where we're shaking out. >> yeah, and i think people -- we always tried to determine whether it's a spli or demand story.
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i think it's really we're all saying it's a supply story i do think big emp and the mid-cap and refiners are run more -- we say it all the time there is less cap x. they are run better that's what gets you the turn. xle was the final trade last night on a relative value to what i think the s&p has done. i think that's about taken a look at something that's way, way oversold. >> let's despite the let's get back to the markets despite to the rocky start to the month the next guest says nothing to here and time to put risk on robert from fund saturate is at the plasma to break it down. >> scott, i think we're at an interesting point in the market. one of the barometers for risk is the call cap x this is the daily chart back to january 2019 it's trying to break out of the trading range between call it 1500, 1450 to 150 oh sitting at this range
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you get the bull-bear push and pull we've had the bulls succeeding now the bears are arguing this is where it peaks out. there is an argument but i think the 1580 level is key. i think we're not getting a pullback here. we'll see how it turns out what you want to focus on is the relative performance versus s&p 500 it's a clear downtrend through 2019 you have a low back in october a higher low here. it hasn't quite exceeded this point. but when that turns that's an important signal risk is back ob let's talk about ideas bulls and bears in the market. people are bearish for obvious reasons and understandably so. >> we are bullish. we think the market cycle has longer to go on the upside let's look at ppg, pittsburgh plate and glass. coming out of the four-year trading range chart back to 2013, this is the 2015 highs it's coming out of the that range. there is the low back in the middle of the year sideways and up.
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that's an incredibly bullish chart. somebody told me a long time ago trade what you see not what you think. this is incredibly bullish out of the two-year range. positive indication for cyclicals. here is the relative strength reversing the five year trend. it's cyclical we like it long-term we want to be involved and then not everybody wants to buy cyclical stocks. here a growth name alibaba, it had the big bear market in here. had one leg sup sideways and breaking out for growth managers we like the name and think there is upside appear relative strength trying to turn. for the bears you don't like anything i'm saying you think the market is negative more toth on the soundside look at pfizer, 3.8 dividend on it it's come back to the 200 week moving average which for me is always the long-term support level. it's an ugly chart but it's into a tremendous amount of support i think the downside is limited. you get paid to own it ride out whatever volatility we see in the end of the year
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beginning of the fir quarter and the relative strength has been crushed. you can do well adding to a portfolio to diversify against the cyclicals and you'll be paid out through the end of the year. >> rob come on over. we will continue the conversation a lot of people look at the russell if to call it the breckout over the last three months versus the s&p saying that's confirmation of a higher move. >> have we broken out the high in april, russell 161. here we are now basically at 161. in my book it takes more to see a breakout you can make an argument we're topping out here if we are not you have another 7.57% to the 174 level quickly on ppg mike mcgary was on "mad money" last night. s you are talking about the 10% eps growth trading at a 20 multiple that's rich in this environment in my opinion. >> what about guy's take on the russell. >> he is right lack pipts marginally broken out
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and sitting on top of the trading range. all the indicators are overbought people talk about the short-term data stretched the last two to three weeks. the bears have been run over on that but it's marking time. we're seeing 1580 op the russell 2000 is a critical level i think it goes higher i think the pattern that we saw through the middle of 2019 where we had the rallies and fails and rallies and fails that's not the pattern to look at the cycle bottomed i think it's emerging to the upside i think the market is in a trepding environment short-term overbought staying overbought for some time. >> what you just said is something you could attach to commodities and industry names ppg underperformed the s&p on a five-year basis. is that a sign that a lot of these trades have bottomed and starting to move. >> i think so. when you look at a lot of the chairs the one to two-year sideways bear markets. many of them caught up to the
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2-year moving average. and they're starting to bottom we saw that with caterpillar jp morgan breaking out of tooth you-year trading range incrementally you see the break out. i think it's bullish. >> so you saw the first chart you had is pretty big divergence how wide has it gotten. >> i don't have a metric for you. but the russell doesn't -- in fact the russell doesn't lead in the big bull markets it actually lags and a five-year rolling basis back in time it's not the leadership in the market you get spurts but don't have to lead to be in a bull market. >> rob, good having. >> you thank you. >> thanks for being here. >> coming up after hours action in zoom video, crowdstrike and ulta beauty. those companies reporting results. plus presidential candidate elizabeth warren proposing a big change to how companies do business more on that ahead, live from times square in new york city. much more "fast money" right after this
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>> welcome back to "fast money." time for earnings whip around from a couple of recent ipos to a big name in beauty seema modi standing about the latest op beauty and
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crowdstrike. >> what a difference a quarter makes. shares of ulta rallying after a strong third quarter last time i checked up about so% 9.6% now process so in august they reported the stock tanked about 30 after diseighting results. the news today providing a bit of relief. now domestic makeup sales stalled across the industry. but we see skincare. the ceo mary dylan pointing how to capitalize on that. take a listen. >> we are taking actions to fully capture the opportunity of skincare ds trends this year we added more than 30 skincare brands to the assortment increasing offerings and increasing focus on skincare is marketing campaigns as well as leveraging flex space in stores to highlight growing brands and newness in the category. >>en at kylie cosmetics and cody partner announced weeks ago almost certainly coming up ulta is the exclusive retail
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partner for the brand. we will flag news from that. >> rahel we appreciate it. >> let's trade it on the desk. >> a big relief rally. i was looking at the straddle expecting a 8% or 9% move. >> the pe multiple had gotten crushed. the last three years average of 30 and below 20 going into the print. there was skepticism wasn't a huge giant quarter. but certainly good enough. and i think we'll see continue to see it rerated back closer to the higher multiple. >> there is such a tailwind in this space still even guys probably exfoliating after the show tonight if you look at the margin in the space, the competition you look at what ulta has been able to do i like the trend here. >> yeah, so -- i have to respond to that. i can't just sit here. although i typically would but i use saint ives scrub process made from apricot pits crush. it's a wonderful exfoal yant
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that's why at 82 i look the way i do if you look at ulta, a december low held valuation is reasonable. 18% growth rate probably margins than people expected i think despite the move higher you can buy it zbliel let's move to zoom and -- >> you don't have to respond you just have to move on go to zoom. great tv show in the zbleefts only thing i can do. our seema modi is all over the earnings results after the bell. >> three words, slowing revenue growth that's not what the street wants to hear from zoom and ipo darling that has been on the tare this year revenue growing about 85% in third quarter compared to pennsylvania 96% growth rate in the previous quarter zoom which specializes in remote conferencing services went public in april at $6 it 2 a share. even with the loss it's up about 77% since the ipo. another recent listing, cyber
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security frirm crowdstrike trading higher strong earnings plus raising guidance for 2020 as more companies prioritize security services. the cfo says he expects free cash flow positive in fiscal 2021 the stock had a strong start on the public markets but recently has been under pressure just a for a days the ipo lockup is set to expire. it's down about 44% from highs hit back in august stoto scott back to you. >> appreciate that seema thank you tim. >> crowdstrike to me, the customers list is a whose who of the frrn 50, fortune 500 they are taking market share. one of the high profile ipos wasn't making money went from 95 to the 50 as we discussed the the fact ner taking market share in the cloud symantec with be the legacy player, they are taking market share. the market is digesting how much
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was hype and how much reel that's an interesting order book >> i hear they got the server. let's go to zoom because the zoom is interesting. the story of 2019 where all the veryexpensive tech ipos most o them losing money. this one basically not losing money. this is a break even company that was an interesting part of the story. it's still up 100% from the ipo earlier in the year. and this is one, okay, they are deaccelerating from 90% growth s in a 30% plus grower years to come and when you talk about where they are in the enterprise and clients they have to sign up -- the adoption is very early on this product so to me down 10% in the after market, i suspect this closes well oh on the year. because i know this is a name still in demand because they are basically profitable on an adjusted basis. >> everything is going to be scrutinized more heavily in the year ahead for certain. >> correct. >> this name no notwithstanding. for more more on the big day of
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earnings head over to here is what else we have coming up today elizabeth warren has some big plans for big mrjers what her proposal could mean for m and a and the start-up trying to keep up with the big guys and later, california's clamoring to get the cannabis industry to fall in line but will this be another stumbling block for the stocks ke we di ivento that and more when "fast money" returns.
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welcome back democratic hopeful elizabeth warren cracking down with a new anti-trust policy. one that would ban quote megamergers between big companies. ylan mui in d.c. with more. >> scott this is draft legislation.
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but it does put some flesh on the bones of the campaign promises that warren has been making on the trail. now a source tells me the new ban would kick in one when one of the merge attention companies has $40 billion in annual revenue and also apply if both companies each have at least $14 billion in sales that would mean the plan would cover more than 200 of the companies in the fortune 500 list from general electric to good year tires to the gap some elements in the bill are similar to other democratic presidential candidates like rival bernie sanders he has also culled for bright lines for banning mergers. they didn't provide specific numbers. sanders also suggested uncould doing deals done during the trump administration still unclear if warrens bill would be retroactive. i'm told though that her office is talking to david cicilline as a cosponsor. he is leading the house anti-trust investigation into big tech that has yet to wrap up.
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so the time line for introduction is still up in the air. meanwhile sources do caution that this is a work in progress. so those $40 billion and $15 billion-dollar thresholds could still change maybe the metrics should be something like total assets of market share or perhaps all of the above. but ultimately the goals of concrete parameters for mergers and shifting the burden to business to explain why mergers make sense, those aren't going to change, scott back to you. >> that's ylan mui in d.c. a work in progress from a candidate who is not even -- not close to getting the nomination just sounds like a little out there now. >> well, i mean, $15 billion, $40 billion. >> nothing. >> if these are bright lines it's blinding light when you talk about real companies. and a doj there to do this job and evaluate every deal based on upon the the merits of the deal or the actual ability or whether there are anti-competitive dynamics at work
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i don't think this is a very market friendly dynamic to say the least. >> do you think? >> i don't think this is something that really is something we should be worried about. i don't think this is -- >> that's my point. >> d.o.a. >> it should be d.o.a. this is legislation that's worse. we don't care the industry, the deal, the market is, how big it is, who the competitors are. 40 billion, 15 that's the way to decide. >> there is a sense of irony you go look back and look a at megamergers. she seems focused on the higher end they don't go that well at the end of the day it might be doing the c suite in the u.s. a favor but i would tell you what you are saying we don't need legislation we have government agency agencies to take care of this stuff. obviously as the political winds change we see different attitudes towards the mergers. but the bigger issue might be right now what does it look like with companies merging and how much can china block it or the u.s. block it across border deal put it all to the together and doesn't really kind of por tend well for m and a going forward
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in if this was legislation. >> speaking of 2020, our next guest stocks could stee a rally in the new year pr jongtsen gala at credit suisse welcome back. >> thank you. >> plays off the news from elizabeth warren that's one of the kinds of risk that is investors have to entertain in 2020. >> yeah, and i think that you guys all got this right which is this isn't going to happen this is campaign rhetoric. this isn't proposed legislation that has a shot. and there is all kinds of mechanism to address these things and karen you hit it this is not the way it's going to happen. but the more important thing is the market doesn't care. and frankly i think right now if you don't look at the polls but you do a survey among wall streeters. what they are saying is that you are either going to have the president with the another term or a -- or moderate democrat and that these issues are probably in the issues we have to face. whether that's right or not i don't know but that's the consensus view
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among investors. >> the headline for the market next year for investors is going to be what, do you think >> the headline is that the earnings will be okay. the market is going to do way better than you think on okay earnings >> how >> look at the return of capital the companies -- you have a dividend yield right now of 2% companies buying back more than 2% of shares the return of capital is over 4. interest rates under 2%. you have a fed clear they're not an adversary look at last year, the fed was adversarial to the market. this year we'll probably -- our estimate is we'll end up with 5 plus percent eps growth last year about one -- not last year. 2019 so better with you not brilliant. >> market can go up with that i mean significantly. >> 10 oh%. my target is little bit shy of 10% upside from here and i think that you're getting that i think there is weird reluctance people have when the multiple on the market is 18 to
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say it's already higher than normal can't go higher >> only because it -- most of the stuff that's happened in the mechanic, the gains are due to multiple expansion now right the earnings weren't there. >> not really. >> now you need earnings to carry it, don't you? >> look at what happened, the big pickup in multiples was an unwinding of the fourth quarter of last year if you looked at this year and last year combined, you have basically you know relatively flattish, you know, multiples. and you have okay, you know to be -- you're not looking at anything brilliant but i think the real key here is that the cost of capital is low compared to the return of capital. that means is it goes up and more people get it wrong they're only looking at earnings number and miss the fact that the environment is supportive. >> can't make a market timing call on the back of this but warren buffett is sitting around with $122 billion-dollar in cash. the big indicator he looks at the wilshire market cap over gdp
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is like 147% lap last time we saw that it was in 2000 the market extended on metrics is that scary? >> first of all what that doesn't look at is what's the discount rate? what's the interest rate environment in and how strong is the economy? look at germany, for example, they have a huge economy and very small capital markets, right. we have a big capital markets and less bank lending. so it's -- is it a crude rule -- rule of thumb? yeah that's nothing more than that so, yeah, i don't see there is right now is a headwind. what would make me concerned if the you have -- if inflation -- we have a tight labor market -- nobody is talking about inflation, doo do i think we see it absolutely not. the market is ahead onthe cyclical rally that we're convinced that the economic data is getting better. do i think it shows up absolutely could we be wrong collectively sure i mean right now we still have
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an ism that hasn't shone really any are resilience to jump but there is a bunch of other metrics saying it's going to i'm on the right side of this one. but, you know, we could be all be disappoint zblad jonathan good to see. >> you good to see. >> you tim. >> it's interesting german factory order. not showing signs of turning around the big numbers payroll is tomorrow the question is if the u.s. consumer stays working and employed and get 3% to 4% wage gains that's difficult to derail in terms of the economy. but what we are seeing and trends are not terrible not good on adp on not good on the jobless claims we're not hiring we're not firing more people right now but that's something you have to watch. >> karen, quickly. >> he makes actually -- the fed i could see us getting more help from the fed nextier actually which would be good for stocks. >> yeah. all right. speaking of trade, don't miss national economic council
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director larry kudlow on squawk on the street tomorrow, 9:30 a.m. eastern right here on cnbc coming up, a bumpy year for a particular airline stock what's going on? and will there be turbulence ahead. >> nice job. >> we'll break it all down from managing inventory... to detecting and preventing threats... to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.
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we're back on "fast money. united airlines ceo oscar munoz, the latest exec stepping down in a busy week of top level shakeups united president scott kirby set to take his place. phil lebeau in chicago with more >> hey, scott, a move that doesn't come as a huge surprise in the airline industry. look, oscar munoz when he hired scott kirby in 2016 most everybody said look it's a matter of time before oscar munoz once he rights the ship is going to say i'm turning over the reins. munn ohs mofz up to executive chairman and kirby to ceo. this brings up the game plan for united it's the same we have seen since he came to united. it's a pretty simple formula that has paid off. he is he is adding 4% to 6% capacity in 2018 this year he will do it again next year. that means more flights here in the u.s. going through the hubs particularly denver, chicago,
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houston. that grows revenue the margins grow with that and guess what else grows. earnings take a look at united versus the biggest competitors over the last couple of years no comparison. they're up 40% over the last couple of years. yes it's been relatively flat this year. but the entire industry has been like that. i want to show you united versus american airlines. the reason we show you this, if you look at american airlines -- that's just united by itself but if you look at united over the last year it's down 26%. you look at united, it has outperformed american. the reason i point this out, scott, and see it has been swirling around in the rumor circles in the airline industry over the last couple of months that american's board would say, you know, we lost scott kirby in 2016 we lost a lot of the mojo. should we bring him back potentially as ceo now no formal offer was made to scott kirby. we're so the saying doug parker is going to be replaced as american ceo but the rumor was
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out there. has to make you wonder if at some point the united boards scott that they said, okay we have them here let's not lose him. >> you don't want to let him out the door we appreciate it, phil it speaks to how highly regard melody kirby is in the industry. >> i think people would attribute he to be the growth behind united over the last couple years not necessarily mr. munoz. mr. kirby is seen as an aggressive industry player if anything i think it puts united to continue to press the pedal to the metal in terms of how they grow network capacity which isn't good for the stock people get worried about that. i would also say that the abrams as a sector such great trading stocks you have seen united in the last two years give you about 50 opportunities of up and down 15% ranges i think they are worth owning on valuation and worth trading. >> only so much a ceo can do in these businesses and that's why maybe in other businesses when the superstar in
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weighting gets promoted to the top job the stocks pop stocks aren't doing anything today. >> i think so as phil said it's been telegraphed making him president last summer. but there is more industry stuff, more macrostuff. >> how many every wills -- as a ceo what can you really do little things here and there. >> choosing to add capacity, strategically adding capacity. but then you have macroissues they're all moving together. >> all right coming up oil has been on a slide this year. but one options trader is betting big on the big boost ahead. stick around look at the cramer cam, jim talking with ceo brian nichols about the chipotle red hot year. >> some jacket. >> full interview top of the hour on adon.""m mey don't go anywhere. there is more "fast" after this break.
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we're back on "fast money. energy stocks captain catch a break. the sector hit again today even as crude oil ticked higher amid the opec meetings. the meeting breaking up in the past hour. the iran oil minister saying there is agreement but providing no details the saudi oil energy minister meanwhile saying we'll hear the beautiful news tomorrow. energy secretary are the the
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worst of the year. flat this decade worrisome, two thirds of the names in the space are in a bear market but some options bet going might turn around. bill baruk is at the plasma. >> crude oil gained 6% this week but energy stocks missed the bus this week again. byo but they are buying options and in particular looking at the xop, an etf in oil and gas production the call strike has seen 66,000 contracts trade today, almost 30 times the amount of volume into the month. i want to sell the options i'll show you why. first look at a chart going back this year. this is the high last october. we have seen xop lose 50% into this month right here the trend line brings resistance at 22 happening to be the stroik price then you also have the 50-day
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moving average as well so we have a lot of resistance up there the market has to chew through for the calls to be productive that means i want to sell the calls. looking farther out as well. in the chart going out to 2008 we also have a low from 2008 and 2016 that we broke we actually made a new all-time low in xop on monday when the s&p futures made a new all-time high overnight coming into monday now, again that's something i want to fade i think we'll see a new low coming in. i'll show you how we play it we use the risk reversal spread sell the 22 calls. 22-24 call fred to limit risk. receive 30 cents on that turn around and use the money to buy the 19-17 dollars put spread looking for it to come in potentially new lows in xop when it happens i want to take half the position off with a profit of 50 cents and let the rest ride. >> risk reversal where have i heard that before. >> interesting bill's strategy what i think is really nice about it he is
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pressing something that is pressed down to the downside he thinks further downside and the strategy he does in particular is he is doing it so he is covered. he can't blown out to the upside pressing the short i like the strategy especially if you really try to press something that's ground down a lot. because i know that he dotes not want to be naked short calls in something down so much to quickly. >> you like that he dropped the double r. >> i love it a great strategy a great twitter handle it follow it, people. >> good to see you bill baruk for "options action" tune in to the full show tomorrow 5:30 eastern time. what's up with the pot stocks heading lower this week? our cannabis king there he is. ready to blaze a trail for what's next. live at the nasdaq in times square more "fast money" still ahead. this piece is talking to me. yeah? so what do you see? i see an unbelievable opportunity. i see best-in-class platforms and education. i see award-winning service, and a trade desk full of experts,
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available to answer your toughest questions. and i see it with zero commissions on online trades. i like what you're seeing. it's beautiful, isn't it? yeah. td ameritrade now offers zero commissions on online trades. ♪ - when i see obstacles, i create opportunities. (soft music) - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. (cheering) - so when i face barriers, i can break through. - [announcer] breakthrough at
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welcome back to "fast money. cannabis stocks getting stoned this week. >> oh. >> whew. >> big names leading the way lower. as the names get ready to close the door on what's been a dismal year an overlooked legal hurdle might be a buzz kill for the space. jane wells in los angeles with
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the details. hi, jane. >> hey, scott, one word. compliance look, legal businesses you see the billboards and stores popping up all over l.a. they learn they have to do things like compliance audits, another expense for an industry losing ground to the black market which doesn't do audits still those going legit or hanging in there like melissa etheridge. >> it took two years to get the manufacturing license in santa cruz license and we are the only one. >> etheridge says she spent close to 7 figures to get licensed she calls etheridge farms, compliance has been an unwelcome surprise. >> is anyone compliant in california >> i don't believe that they are. >> now,ly crock et is at compliance expert at mmlg, a consulting firm. california has so many rules with unintended consequences it can't give ou free samples,
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making sense but is an issue at a trade show and the sales people can't handout samples to retailers on can't give to the employers for r & d. and cannabis taxes going up january 1st. >> there are operators that are conducti conducting illicit activity to pay license industry taxes because any can't charge consumers the numbers without them going away. there is in competition at the consumer level between licensed and unlicensed >> etheridge farms is not easily let's sell it and make a bunch of money because we are dedicated to compliance and to medicinely present this to the world. >> etheridge is a believer in the plant in legality and in legality and she hopes to have the products on the market this summer, guys >> jane, thank you jane wells for us. all right, tim. >> good work by jane things are so bad in the pot
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industry that willy nelson announced he is not smoking pot anymore. that sells you where it's at what jane is talking about is what the industry wants. the industry wants more compliance so when the cold memo came out which said the feds would leave it to states one of the things they said is you need more regulation and the industry said yes we need more regulation it's going on right now. the black market is running rampant in california. making a lot of the legal non-illicit businesses lose money they can't compete to be clear, regulation compliance whether seed to sale of which there is all kinds of sophisticated software it's an industry had to be compliant if you've been doing it right i think this is good news not bad news >> you're long a number of names in the space. >> i run an etf. >> just remind the names you are long. >> a long list go online and you know go to disclosures on "fast money" and my own that's the which we do it. >> okay. >> but what i would say simply is there is no question if you
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look at the industry continues to trend somewhat lower. i think you have a dynamic here where you have a regulatory dynamic going into 2020 which gives you some bright spots. but the valuations are really in a very different place so that's -- >> i thought -- a thought came to me. >> you feel like he was blowing me off. >> no he is not. >> you know. >> next. >> pepperidge. etheridge farms why am i etheridge farms you do like you don't remember marijuana. >> short term memory loss. >> 73 times right now. >> let's go to break
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>> time now for time trades. tim you're first. >> big airline discussion. aal is definitely the least favorite name maybe the least quality but i think valuation is interesting here i like aal. >> you want to try that ticker one more time. >> al. >> thank you >> appreciate the second opportunity. >> looking out for you. >> ulta. i think the earnings will be a big relief to many thought the story was broken i don't think it is. i like it i don't like to buy it up a lot good bet. >> danny boy. >> energy stocks pop on anything on opec sell the xle.
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>> great investigate you here tonight scott. hope you enjoyed it 5:00 each night you notice blackstone breaking occupy to the upside. >> we talked about it today. >> we did. >> i was watching. >> that does for us more tomorrow at 5:00 jim cramer begins right now. my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now >> hey, i'm cramer welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to make you some money. my job not just to entertain, but to educate, to teach call me at 1-800-743-cnbc. tweet jim cramer the stock market, it's had an incredible run this year, yet two-thirds of americans say they're not experiencing any benefits from it how the heck is that possible? acg


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