tv Fast Money CNBC July 23, 2021 5:00pm-5:30pm EDT
welcome to "fast money," everybody. tonight, one of the biggest weeks for earnings kicks off they could drive this juggernaut stock market higher. so should you trade it or fade it we'll play it. plus starbucks, want a venti sized run. another new high, but with coffee prices surging is it time now to trade down? and ready for takeoff? maybe not so fast. the new survey shows business travel may not be coming back as fast as we thought but you may want to know what it
means for one major sector of stocks ahead hello, i'm brian in for melissa lee tonight. most known for combining the words play and trade into some word i made up in the intro. your trader lineup they're lean and mean and ready to go. steve grasso, pete najarian and grasso, congrats one wild week. do you remember monday's market meltdown the s&p dropping more than a percent and a half the dow down over 900 points, nearly every stock slower. you say you don't? neither do investors because apparently we not only ended the week higher, but check this out, the s&p 500 up 4% from the monday lows and is now sitting at another record high 23 stocks in the s&p hitting a new all-time high today. names like advanced auto parts,
paypal, pepsi, the nasdaq, and roper. the company not the nosily landlord and oh, yeah, the dow finished above 35,000 another big -- thank you for getting that for the first time ever. all of this as we get ready for a huge week ahead. some names you might have heard of apple, microsoft, amazon, alphabet, tesla, wow so steve grasso, of grasso global, with markets at record highs and a slew of important results on deck, how are you setting up for next week's trade? >> well i have to tell you, brian, the market has been some jack tripper for the average investor here. >> nice. >> but if you look at what happened on monday, the s&p stopped on a dime at the 50-day moving average and just ticked up almost down to the dollar, basically, on the s&p. which means that people are
watching technicals because they have zero clue what to do. sara kind of summed it up really nicely people are worried about the delta variant and inflation, and then earnings kind of pushed all of those worries by the wayside. so what do you do now? you look at your value basket and your growth basket and you say, let me make sure that i have a mixed both, or is the ten-year movement based on lack of growth or is it more what i think positioning. people were so short treasury and when they didn't break, brian, they were forced to cover. >> yes and pete, with all due respect to all of my friends and colleagues, i find it hard to believe that the delta variant sent markets down and then the next day the markets were back when the delta variant is still there. i look at the structure of the market under the hood, what you and john and all of you guys do very
well mike, look at options. everybody in the options market, they're going long, long equities and selling volatility short. you get some kind of a spark and then you have that sort of big implosion and we've seen this now many times these thousand point down days only to come rallying back, pete are you confident that whatever went wrong on monday with volatility, options, structure, is that over >> well, i would say this, brian, it is not just monday, it is friday. you combine the two days an the market is absolutely getting crushed. so then all of a sudden it seems as if, and here is the interesting part, when we looked at the options market and the reality was this, people were not coming in and in a panic looking for puts that wasn't it at all. the trade that we were seeing was the aggressiveness and steve brings up a really good point about the technicals on monday it hit that number and literally flipped and turned and burned to
the upside off of that number to close a little bit better. so i think the reality is this -- there are -- the bears are not necessarily in the market yes, i think the headlines were stealing things pushing the markets down and as we made the turn the focus became, well what about earnings well the earnings season continues to be very, very strong and when we look at today, or last night and you look at twitter and snap and some of the implications of those, in terms of what does that mean for facebook, what does that mean for apple and the tech companies that start to explode into the earnings season this coming week so that is the exciting part for me but i'm with you, and when you look at volatility, it was up there toward 25 and it sold off to 16 in a heartbeat it was just absolutely amazing to me, brian, how fast things turned and that tells you that you are right, it was the delta variant maybe as a headline, but there was a lot more going on underneath as well
>> well i think that is it and again i'm not trying to discount you any headlines or colleagues, but as you talk to options traders as i do all day long or read their stuff and delta, mike, may have been the match but it certainly wasn't the cause. i mean, was it that technical bounce to steve's point monday off that 50-day moving average because i'll tell you what, the names and let shows them again, the stocks that are rolling out earnings next week, these are the names. it is not oil companies or whatever that control the stock market these are the names that are the top five holdings of every major etf out there. these are the names that i think, mike, it is fair to say that have to come through. do they not? >> yeah, i mean they absolutely do in terms of option volume, the stocks that you were just talking about that are reporting next week out of the couple hundred names that are reporting, the top six names, amazon, apple, we're talking
about alphabet obviously, facebook, tesla, these stocks actually represent notionally about 90% of the options volume of all the stocks reporting next week and actually one of things that piece was talking about, we did not see the panic in the options market for those stocks on monday that would have been most effected by the delta variant. so what would those have been for example? retail we're talking about macy's, nordstroms and gap and aeo and those type of stocks didn't see people rushing into buy puts they were selling them selling premium, looking for opportunities to own those stocks at significantly lower levels i think there are some people who feel like they've seen this rally and missed this rally and perhaps it was the 50-day moving average that they were saying this is my opportunity to try to get in now >> i mean, amazing points there. and again not trying to discount the headlines. it is a hard jay when you have
to find a reason why stocks are up or down i don't want to right those headlines because tomorrow they may change we certainly have seen that. let's look ahead all right. i have a chart here of the s&p 500 against price to earnings, my friends at y charts made it thank you very much. steve, to mike's point when we look at valuations from the numbers that you have heard so far, from the guidance you have heard so far, are you comfortable with where we are in that valuation zone right now? >> i'm 100% comfortable and i think what people have misconstrued is what i mentioned at the tip-off of the show, the movement in the ten-year yield is not indicative of where we're seeing growth. everyone on this desk that watches earnings will tell you that earnings are off the charts people have seen this and when you start to see the ten-year yield and you start to bet against the russell 1,000, 2,000
and you start to say we're in a low growth environment, i think you're making a tremendous mistake. there is still so much money out there and the reopening hasn't even begun to take place, brian. so, when you look at retail, mike brings up nordstrom, macy's, when you look at names of people still flush with cash, they're is not ending until september and this is proposed to be ending in september. people are in much better positions than they were pre-pandemic bookings on all of these companies are higher than pre-pandemic not higher in the last six months, higher before we got hit with a train wreck so that means a lot to me. people that are watching the trade, watch earnings. don't watch the ten-year
>> well to be fair -- we're always watching earnings every week is an earnings season as we know that. i like steve's point we could book the trip now but you spend on the trip when you take it maybe in five or six weeks. we'll get more on business travel later in the show i don't want to give too much away but as we look ahead to next week, what is the most important thing to you is it one of the earnings, is the fed coming up on jackson hole and what is the most bo important thing to pete. >> it has to be earnings and what kind of delivery are we going to hear from apple and from facebook. and from microsoft because we all could sit back and say, you know what, it looks like everything is lining up to be absolutely fantastic and maybe it will be but i think the reality is we want to hear it. we want to see it and we want to see exactly how well these companies are doing. and how are they navigating. and i think that they are very, very strong. i think that read through
through snap and twitter does tell me about facebook and google and those type of names but thereality is we still hav to hear, brian, we want to hear what is apple saying how strong is it really because this is a stock that was in pause for a really long time and then suddenly when it started to accelerate to the upside, we did hit the new highs at 150 and then pulled back almost immediately and here we are knocking at the door again we break through there, there might be a lot more room to the upside than a lot of people think because of specially some of the options that mike and i have seen in terms of buying, whether it is out in august or other months they are buying high strikes, brian. far away wfrom where we are righ now. >> good stuff. gre great intel. and we could sit around the table and tell our children that we remember what happened last monday those weren't the days next week we're getting earnings cross nearly every group of companiesch but just to walk you
through some of the stocks one by one it would be really bad television so instead we're going to hit them with a nice round of trade it or fade it. and let's start with thomas edison's baby, ge. numbers out tuesday and down 6% since the last earnings report mike, your take on ge? >> yeah, so, i mean obviously ge, a company that was seriously impaired coming out of the credit crisis and what we learned at that time was it was also a company that on the really smooth earnings, all of the decades that preceded it have been sticking a lot of skeletons into the closet and eventually they ran out of room. now under new management having moved the headquarters of the business, and they've done a lot to shore up the shakier parts of the business and it seems like they're on the right track that said, it is a big entity and i look at it right now and i just can't get that excited about. it i still think i want to see it go further >> you never said fade it but
we'll take it as a fade it pete, trade it or fade it. >> it was. >> all right so i'm going to trade it and the reason i'm going to trade it is this, i think larry culp took on something bigger than when he expected it to be it did get a bit of a bounce off the lowest levels where it was in the single-digits to where it is right now but it has pulled back once again. when i look at the aviation side of things and as well as renewable energy, i think that they've got a couple of the elements that they've needed for this to be a solid quarter for them so i think right now, i think there is a better upside and especially as it is faded, into this i think it is a trade going forward. >> both sides. typical options trader next up, edison's buddy, henry ford started this company. it is called ford and they make cars an trucks their numbers are delivered on wednesday. ford, by the way, up more than 10% since its last report.
steve grasso, trade or fade? >> right now out of the chute, it is a fade, brian. so play that music nah. when you look at the stock chart on this, depending on where you start from or where you finish, june to july was down 22% as much as 22%. currently down 16% we just heard from gm, it is not that easy to transition to an ev company. i ordered the new bronco, i still can't get the new bronco, brian. and that is not an ev car. imagine when their trying to get the chips to convert themselves from the traditional ford to the ev side, this is something where i think the stock got way ahead of itself. i'm a value guy as of late, i like the price action in it but it is off the recent ehighs so i'm going to stake with the ahh ruling on the stock. >> until you get the bronco.
we'll see what happened. pete, trade it or fade it? >> absolutely trade it i think because of the fact that it is given you an opportunity here, i think that the ev market is going to be huge for them we all talk about it i know steve believes it as well but it is not here yet you're 100% right. but as you look toward the future of the company, that is the direction. in the meantime, you could look at the commercial line and that is going to give them a lot of great opportunities to go forward and since it is pulled back, i think it is gotten too cheap and i think this is a stock that could bounce and spring board back and maybe test the recent highs >> okay. finally, still hard, maybe not in the future, but right now still hard to run most cars with gas and oil or without it rather and oil prices moving higher, too. you have exxon-mobil reporting on friday. mike, trade or fade exxon? >> fade it now that i figured out how to play this game here is the thing. exxon has some games of its own to play. so the thing is, here is a company that is trying to
support the dividend, and pay down debt and it has to replace the reserves and it cannot do all three of those adequately with the cash flow that is not to say that the oil prices can't go higher but they are facing a trifecta of things to resolve so i'm going to fade exxon. >> what say you bronco, grasso >> i'm going to say trade this one. 54 has been support way back since march. way back since march so this one is definitely a trade for me i think this one is going to start rallying again and get back on the horse as my friend pete najarian would say. >> there you go. nice bronco pun. on deck. we know you're excited but maybe don't book that flight for a business trip just yet surprising results of one new travel survey ahead. plus, starbucks surging to more records but something just happened that may make you think twice about dropping some dimes on starbucks stock
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i won't give too much away because i want to you tune in. and i bring this up not as shameless self promotion, but because while there is a lot to talk about in the return to normal for business travel, check this a new survey says maybe jumping the gun a bit. according to morgan stanley, travel budgets in 2022 are expected to be more than 17% below precovid levels. that is a bigger drop than previous expectations of a 15% decline. this is a stock show so let's bring it back to stocks and what this might mean, pete, for airlines an the hotel trades i got a connection at msp on delta, if i miss it i'm knocking on your door on sunday. >> i'll be looking for you and i'll open the door for you i'll keep the light on as somebody on twitter was saying about motel 6. so i think the reality is this, yes, you're exactly right and morgan stanley is right about what they're seeing here, the pesages make sense but the reality is, and i
challenge you to this one, anybody, any one on the panel, if we've flown, you are on full aircraft and planes that are over sold. so i know the business travel is not there but we are seeing the other travelers, whatever they may be doing, whether they're visiting florida or california or family or whatever, wherever they're going, every single flight has been busy so i think that is reason enough for me to say i could start getting more interested in the airlines than i have been a think there is much more upside. we've seen options in american airlines, in united airlines, in della airlines, in southwest all of them have been hitting. so i think that there is a return there as well as some of the hotel space as well, brian so i think there is a lot of reasons the airbnb have been trading the way they have been >> well said and it is about pricing power as well costs are up looking at the airlines, pete, thank you very much. up next, why something
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definitely aventy, better known as a large but whatever you call it, it is what is happening to starbucks stock lately new records. and analysts they like it. battery this week saying the mermaid will see high single-digit revenue growth for quote, many years to come. and they also raised the price target to $142 and more on this website, cnbc.com/pro but right now let's trade this
mike, i'll come to you >> yeah, i'm a buyer of starbucks. one of the things that we're seeing is obviously an increase in foot traffic and i think they have some pricing power. they're able to raise prices dealing with things like higher input costs and commodities like coffee so this is one that i think you stick with along with the other sort of fast casual dining restaurants as well. >> yeah, but pete, what i brought up is coffee prices up 20% this week alone. floods an droughts and both of them in brazil they're costs are going to soar. >> yes they are no doubt about it. but let's also be honest, brian, when is last time you've seen prices for coffee when the price of coffee has begun down, has the price for coffee at starbucks gone down. i'll give you the answer the answer is no it's gone up, up, up over the year so there is a lot of reasons to be excited i think the cold beverage side has become a monstrous piece, a multi-billion dollars piece of the puzzle and you look at gen z-ers and
the millennials and that is the direction they're taking and this is a company that talked about how much expansion with the stores in the future 55,000 by 2030 so there are reasons to be excited about starbucks right now and i think that the cold side of things is exactly the direction that they are seeing the most growth. >> okay, not to worried about it looking at prices here for coffee, watch out. time now for your final trades let's go around the horn and wrap it up grasso what, do you say? >> we discussed it a little bit earlier. general electric into earnings, b buy, buy, buy. i'm not crazied about the reverse stock split but i think larry culp has the goods to turn this one around. >> pete? >> i'm kind of back stabbing us a little bit i'm doing cbs because i'm going with viacom but i think the stock is going higher. >> and mike?
>> yeah, if you want to be in the airlines but considered about a slow recovering travel, pick an airline that doesn't have as much exposure, like southwest which is trading cheap, has lower composure and a great balance sheet. >> all right guys, a great show as always thank you for taking it easy on me and don't go anywhere. it is friday but the regal beagle could wait for 30 more pts because we have "options action" coming up next and pins and the pop and ford v tesla next retirement income is complicated. as your broker, i've solved it. that's great, carl. but we need something better. that's easily adjustable has no penalties or advisory fee. and we can monitor to see that we're on track. like schwab intelligent income. schwab! introducing schwab intelligent income. a simple, modern way to pay yourself from your portfolio. oh, that's cool... i mean, we don't have that.
and hello there, "options action" fans i'm brian sullivan melissa has a night off and we have a big show on tap for you on this friday here is what is coming up. >> ready, set, report. we're about to kick off the busiest week of earnings season. chart master carter worth has your set up with the five biggest stocks on deck with results. plus -- nap, soaring on the back of a big beat and that is tony pinning his hope
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