tv Fast Money CNBC July 8, 2022 5:00pm-5:30pm EDT
>> is persuasive that those trends are going in the right direction. i don't know if they would anticipate that, without those numbers filtering and. >> have a good weekend, we will see you next week. that is a for us at overtime? i will be back tonight at 7:00 p.m. eastern time on the news i hope to see you all then. fast money starts right now. that's right. right now on fast, a winning week on wall street as the major average posting gains over the stretch, now set for the beginning of the most important earnings season in years. we will go inside the numbers. >> plus, traded or faded, financials from next week, testing, belter, unh, we will is the trader on where they stand on these names. later, our chart of the week, a big player has been delivering since the start of july, up
nearly 9% since last friday. we will unboxed the name and see if it should be in your shopping cart. i'm courtney reagan in tonight's -- we are fast money life from the nasdaq market. tim seymour, jeff mills, and julie beale of kayne anderson rudnick, thank you for joining us here tonight. we start with what has become a rare phenomenon for the market this year. and ever elusive weekly gain for the s&p. the benchmark index fell slightly today, but it has still posted a gain of nearly 2% for the week. the dow is also down slightly, but the nasdaq managed to rise for a fifth straight day, his longest win streak since november. all this after the juno report showed the economy added more jobs than expect last month, but the real test could come next week when the second quarter earnings season kicks off in earnest. big banks like j.p. morgan, also delta, pepsi, and some of the names on the calendar. we have a big week ahead. how are your positions going into the week?
>> i am still defensive. honestly, this week surprised me quite a bit because. about it a bit last show, yesterday. really for me nothing has changed and understand how the employment number says okay, maybe we need to pump the brakes in terms of the recessionary pressure, at least the timing of when it might be coming, but i really think quantitative tightening and the fed are impediments to continued growth, at least the pace of growth, and, that has been fueling this market along with liquidity. i think that has changed but i think the fed is more emboldened to continue to tighten and we will see that bleed through into the markets and the general economy. >> what did you make of the numbers today from the jobs report? you think this is locked in a 75 basis point hike at the next meeting for the fed? >> i do, and we have the fed news this week which let us know how emboldened they were in their last meeting. what would we have rather seen today? minus 200,000 on jobs? no. i want job numbers to continue
to be strong. this will be the strangest recession we have ever had in history, when we are adding jobs. the good thing about today's numbers on the wage side is, not only are wages well south of cpi trends but they have stabilized somewhat over the last 12 months. we saw that within today's numbers. so, great that we are getting second quarter numbers back into the market, we are going to earnings season, with nasdaq down 10% over the last sessions, it is not as though we have not done one of these trading ranges, of which we have had four of them, almost 10% since january in the s&p or nasdaq. the good news for the week, not just that stocks are higher, but, we had a some better economic data, but we have had inflation data, everything from commodity prices, gas prices are down 23 straight days, these are the things that are actually giving people a lot more comfort, just on where we
are. bring on of the second quarter. this is what we want, great to have you here tonight. >> great to be here. von was a little defensive? you seem to be looking at bright spots. julie, how do you put it together? the data points look pretty good. and look at that jobs numbers today. how can we feel bad about that? >> i think the job data was really interesting and market reactions to it wire as well. we have gotten to this place where bad news is good news because we are so addicted to the fed policy, having really high levels of liquidity. i think going forward i am really concerned about the jobs outlook because i think there is going to be pockets of major layoff. i don't think front- line workers will be impacted. and, that is where a lot of the wage growth is happening. but, i do think that for many white-collar work, this will be a much tougher economy and people are still very concerned about higher prices.
i think that is important for the consumer spending environment. right now everything is great but we are all going on vacation and everything looks great on instagram. i think come back to school it will be a much different picture books budgeting always looks good on instagram. that the highlight reel. just, what do you think about the moves we have seen in the 10 year? those look interesting, definitely not to be ignored as we look at the broader market move and trying to put together what it tells us about the economy and how all of us are feeling about what we are making trades on. >> yes. it's been a bit all over the place. to go back to the employment report for a second, it is a lagging indicator. let's remember that for a second but that is not giving us a view on what is coming, i think that is particularly important. unemployment is always low right before we enter a recession. so, i am not calling for that imminently but i think we should also keep that in mind. i think that what we are going to see is a slower pace of earnings growth which will trickle through to the labor
market, as companies start to tighten their belts a bit. i am in the rates are closer to top that not, can't. i think that will translate into what i think will be the biggest theme for the rest of this year which is a steady rotation from value into growth. we have had a lot of mean reverting rallies and rest, and i think i would want to see more to really believe this one but from a fundamental perspective, what you will want for the rest of the year is something priced well which has some semblance of earning stability. i think you will find that more ingrowth. growth does well when inflation is falling, when economic growth is falling, and that is exactly the environment we are in or about to go into. i think values earnings are more vulnerable to the economic environment. i think about a sector or an industry like banks that tends not to do so great in a slowing economy. there have been no underperformance as yet on all. for us, and how we are thinking about positioning portfolios it is about reacting to this
rotation just getting underway. >> i was going to ask about banks, you trickled in some of your thoughts there, obviously we often talk about banks, we are starting the discussion about earnings season, j.p. morgan reporting next week. are we on top of rates, and if we are does that mean things are less attractive now than they have been in recent months? >> thanks have priced in a whole lot of flattening of the yield curve, banks have not necessarily priced in the earning power of higher interest rates. we know all about the impact of the mortgage market, mortgage sensitivities, investment banking has ground to a halt. activity has been better, volatility is not bad for broker-dealers. wealth managers are seeing a drawdown in assets. morgan stanley is under some pressure, there. goldman sachs is under some pressure from the investment banking site. i think the monies in our bank right now give you the most diversified exposure. it is hard to get excited about going in to buy banks here, especially as we like to talk
about on this show, the impending possibility of serious credit issues when you look at high-yield. we are at high-yield levels going back six years, we have essentially begun to hit some of those peaks of cove it blows, or if you take those out, you run a line back to the last time we had the beginnings of this kind of feel. slower growth usually means more credit issues. i still think, though, if you are nibbling at j.p. morgan and you are buying great balance sheets especially after we have some insight into that, we will have a lot more next week. banks have sold off into this earnings period . to that extent, you could be more tactical into it. banks are not getting away from us here. >> another round of earnings season getting started, let's take a look at big names reporting next week. we just talked about j.p. morgan. delta, taiwan semiconductor some of us are among the nonbanks on the calendar we are looking forward to so we thought this would be a perfect time to play a little game of trade it or fade it.
>> that's right, trade it or fade it, nonfinancial edition. let's kick things off with you and pepsi, the drink makers set to report earnings on thursday. >> i will trade it, i will play an additional game. i would rather own coke instead of trading it but i wasn't given that option. as i mentioned, i am postured defensively, i think this pays a good dividend. 3% or 3.5%. the multiple is a bit, but looking back historically it is still within a standard deviation of where'd wear that pe multiple has been. i think that is the shoe to drop, but, given that and given the defensive posture of that brand, i would think even if there is a downside it is limited. sometimes it is about losing less than the alternative and i am willing to play that game right now. >> i will ask you a follow-up, then, you would rather own coke ahead of the earning for pepsi, would you rather own coke? is that something you're
actively looking at? >> i would rather own coke in any scenario. it is just a better operated company, higher gross and net margin. they trade on top of each other in terms of what you're paying for earnings. i just think it is better in class. >> fair enough. jeff? >> i will fade this one but i understand what he is saying. i am not excited about the market right now, either. i think owning defensive stocks makes sense. you have resistance at 175. i would watch that level of bricks above 175 maybe i change my tune. 155 on the downside, i think if it breaks below that, it is at the top end of its range, really going back to 2000. i think it is trading around 25 times in the sector, below 20 times. those issues concern me. if there is any margin pressure at this evaluation, that creates more problems.
i agree about the dividend but potentially less attractive, people are going to name just the dividend when there is movement in the bond market. >> it is a bit away from that 155 mark. nextep, delta airlines, set to report on wednesday, julie, i don't know if you have been flying lately but oh my gosh, what a nightmare. we are talking about stocks, julie, what is your take? >> there is no bigger hype girl than me when it comes to delta. the operation. but, delta the stock is probably not for me. i think what we have been seeing is, look, it is full on planes. i just flew and it is absolutely full for summer vacations but those are not business travelers and they are not paying the full fair that we do. the fact of the matter is, we are just not going to be traveling as much for business, as we used to. we have all figured out how to do it. i go on 15 trips per year and i'm on five or six now. travel is what really keeps that plane flying. it is so much more laughable.
i think, long term, this is not a great stock to own, but the operation is very well-run. >> that makes a lot of sense. i am very interested in hearing what they have to say about the consumers and their expectations for consumer travel and business. tim, what do you think? traded or fade it? you like delta? >> i will trade it. not lost on me i am going up against the airline analyst, against her views on this. i think some of the conference right now are complains of pilots and things. front of the bus and business travelers in a different place than it was precode but i am also listening to covid tell me where those trains are improving, as jessica pointed out, i think you have a dynamic where delta certainly has a good balance sheet and a look at the valuation based upon the street somewhere around six dollars per share, i think this
is value territory. moving on, taiwan semiconductor reporting thursday, trade or fade? >> fade this one. i think you could make a good argument, i think for the here and now, it does not hold that $80 level. you could go all the way down. to avoid stuff that is typically exposed and i think this is one of those particular names. >> what is your take on this one? >> my first take, apologies, second, i think i am a buyer and i think the valuation here, we sold that major stuff, keeping ahead of the class, they are your basic boundary recovery. >> is a bird, it is a plane? he will join us to break down where the housing trade is
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welcome back to fast money. as home prices and mortgage rates rip higher, housing affordability slipped. influence levels lowest levels from 2006 according to the national association of realtors. where are builders? carter practice in the house, he says there are worries to run. >> what is interesting about the reference point he said in 2006. first, relative performance, is an important part of investing and i think -- three-quarter percent heb, the market. depending on constituents and how you weight them either way, housing has been much better than the overall equity market. let's look at charts. what is remarkable is that the all-time housing peak, we exceeded it and we checked back to it. we are sitting right here on
the line. and, it is holding. charts are very important and we see that next. the market topped in january. more on the queue queue queue. what we have now is we have been up against this line and we have touched it and touched it and touched it and we are there again. this time, however, up to the 40% decline i think it is up and out. we will break out. so, another way to look at it is in the channel. like sort of a pinball machine, we have been inside the channel, perfectly, and you know what? again, i think it is green arrow time. finally, a big stock that is housing related, home depot. it is a very cohesive group, they are setting up the same way.
he is almost twice that of the s&p. my thinking here, back one more time, green arrow higher. >> thank you very much, we will see you back here for options action in a few minutes. for now, let's trade this. what do you make of carter's charts and his feelings? >> i think there is very little upside in taking the contra side of carter's charts. i do say i think there continues to be a bit of headwind in the housing market. but, he mentioned affordability. and, for that reason, i think toll brothers is a name they have looked at, above the k 95 price point you will not see the same volatility in terms of demand there. i think you can start nibbling, here. but, i would just be cautious, i would not jump in with both feet quite distant. >> julie? anything to nibble on here for you? >> not for me.
i would agree, if i wanted to have exposure to the homebuilders i think that is the one to play but if you look at the ford ability right now, if you look at april's mortgage payment, that would constitute 41% of the average household income. 41%, but is well in excess of the guidance of 3%. that is how much i spent on hair and makeup because underneath here is like an old grumpy man. it's just way too high. i think we have to remember that the earnings of all of us collapsed precipitously. if you think about the decisions to buy a home or not, it is a huge decision. >> fair enough. looking like a man, ugly underneath that, >> a happy lovely woman. heading onto twitter, if we
can, we have breaking news about elon musk, and looking more like he is trying to terminate the deal to buy twitter. you can see extended hours are falling sharply, more than 6% down on these headlines, facing issues including fake accounts. something that he has been really stuck on for some time, and has bothered him very much about the business of twitter. juliet is talking about sun valley, how many executives seem to be excited about how he may be giving up on this because many of them also had reasons why they would agree with his initial idea but potentially right now, this deal looks like it may be off here. below $35, down about 6% right now. tim, do you have thoughts? i know we talked about this one ad nauseam but if this really is the real deal, it is ending, what are your thoughts? >> elon is the gift that keeps
giving. karen heinemann, back when this deal was coming together, i don't know where she sits in that position but good for her. and, i see twitter now back to before this elon story, i think you have to look at the company through a different lens, because we have now confirmed there are no other buyers. we have now challenged some of the assumptions on the number of users, but we are really no different than where we were. we are at a place where twitter timmy is still intrinsically valuable, a company that many people thought would move significantly higher than it began to monetize and they brought on some of the new product that were going to increase engagement. the cyclical add cycle also hurt them here, and that doesn't last forever. so, i also think you are shorting twitter at this point, maybe the best thing that happens to this company is elon running to the door.
>> there is a filing that includes a letter from elon musk saying that company twitter has not provided the information that he has been requesting, now, for nearly 2 months which is part of the reason why he is terminating this deal. again, twitter shares are trading above 35%. they are down about 4.5% or 5%. i am sure this is not the end of the story. >> what you make of what is going on with twitter and if elon musk is not interested in twitter does this open the door for someone else, potentially, to buy the name? >> know. i think this is probably one of the most shopped deals, once elon was in play. i think long-term this is a benefit. the confidence in elon's ability to run this business, seeing as he is the ceo of to other businesses that are quite large and complex. but i think, longer term, it should be positive for them. in the near term, something
that has changed for twitter is that tech evaluations writ large have declined precipitously. i don't think there is a great floor underneath this business, because we know there is no buyer, nothing to sweep in and save them and the strength of the business is in question, long term it is a positive for the company. >> that is interesting. what do you make here of this? since we have the filing in this letter from the attorney that elon musk is terminating his offer to buy twitter? >> i think the probability of that has been going higher over the past couple of weeks. this has been a stock that has been challenged for a very long time, almost dead money since its ipo. there is the question of the business. which is, can it improve monetization. for me, that is still a major overhang. i don't know when is going to
improve in terms of buying and now at this point in the cycle, i think it is also challenging. for me, it is something i would set aside until there is more clarity in terms of the business. >> for anyone who might be tuning in, we have now seen a letter from elon musk's attorney giving the explanation for why he is deciding to terminate his deal to buy twitter, saying that twitter has not provided information that he has been requesting for the past two months. he has made numerous attempts to follow-up with the company to try to fill in some of the blanks that he was missing from this information in his broad request, he does not believe that he was given the information that he needed. twitter shares netratings $35 per share here after hours, down about 5%. really interesting turn of events, this has been quite a road, the beginning of the idea that he would buy this, the
price at which he would be on the board or not on the board, but he would potentially lower the price, tech valuations have come down since that point in time, something made that initial offer and now, here we are in early july, and he says no deal to buy twitter, with elon musk terminating the twitter deal according to a letter from his attorney. shares down about 5% on this news. interesting stuff, going forward we will have to wait and see but we will get to final trade. >> julie? >> a company i think is interesting right now is absent technology, a business that serves the oil and gas industry. long-term contracts, that is what i am most focused on right now. >> jeff, how about you for final trade? >> i will lean into my sigma trade from tuesday. it is up 5% and broken out to a new high. i think momentum carries it
higher. >> how about you? final trade? >> continuing the defensive theme, unh really comes down to pricing power. they have it. >> mr. seymour? >> if carter was drawing a chart on ali baba, i think have a green arrow breaking out of that channel, good news from china on the macro. >> thank you all for joining us here on fast money. options action is coming up next. what a week it has been and ekat a week it will be next we. thanks again. we will see you soon.
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it is friday. thank you for joining us for options action we will start the show with some breaking news. elon musk is terminating his deal to buy twitter. we have alex sherman from cnbc.com reporting for you on the newsline and can share a bit more about what we have just learned in the last couple of minutes. alex, what is going on here? what was the final breaking point for elon musk? >> this has been a drumbeat for several months, where there ha