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tv   Fast Money  CNBC  July 16, 2019 5:00pm-6:00pm EDT

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overshooting the initial reaction to some of the banks and maybe you take it back when you get the final big bank report here. i guess the trading line, really people aren't that fixated on in general across the bank. >> goldman as well equities rose year over year, so not as bad as people thought they would be. but we are out of time that does it for "closing bell". >> "fast money" begins right now. it certainly does. "fast money" begins right now, live as always from the nasdaq market site overlooking the beautiful cool breeze of times square i'm brian sullivan in for melissa lee. traders on the desk are pete najarian, karen finerman, brian kelly and pleased to welcome jeff mills from pnc. thank you for coming in, jeff. >> thank you. >> here is your setup. the dow squeaking out a record high today, and for all of you bulls out there, there is one chart that could, maybe, signal more gains ahead we will show it to you because we're tv plus, netflix on deck. their results tomorrow media mogul tom rogers will be
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here to tell you what the key is going forward for their streaming success. but we begin with planes, trains and automobiles, the transport surging back today trucker j.b. hunt crushing earnings the airlines soaring that group up, 5% in just the past week so is the classic dow theory, the idea the transports are going to lead the market back in vogue? it's been around 100 or so years. pete najarian, is that move a huge move for airlines, railroads, truckers, mean that it is all all clear for the overall market >> i don't think it is that easy i don't think the markets are ever that easy everybody loves to say that. >> is that theory dead >> i would say this, it is a great sign the airlines, we watched them produce and produce and produce and people still don't want to seem to own a lot of the various airlines when i looked at delta numbers last week and it almost went by and nobody talked about it and yet they crushed it. they had a record second quarter. so we know right now that they do have pricing power.
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they've got great deals with the credit card. when you look at unite it, yd, u look across the entire landscape, i think the pricing power they've got is impressive. obviously with oil just kind of hanging around in the 50s, 60s, that sort of a range, i think it gives them a great opportunity to just keep printing money, which is exactly what the airlines are doing. >> yes, but separating out the airlines from the rest of the transports, right? >> yeah, yeah. >> a very different story. csx earnings coming out after the close right now. it is worse than expect. jb hunt earnings last night were slightly better than expected on weaker estimates they weren't really that great csx comes out and says intermodal is down, a slow drip down it is not complete gloom and dom but a slow drip down that's the story of the interior of the economy the airlines i think are separate from the rest of what is going on in transport i would not look at a broad index and go, oh, everything is great in the market out there. these csx numbers are not that great. >> i have to push back on you. you have canadian, pacific,
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norfolk southern, they're stocks are 48%. >> and the dow is down after the close. >> but they're up 36% for the year. >> but they're down, the reality -- the reality is that the earnings are not great that are coming out now so whoever bought the last 38% was wrong. >> well, for 33% they were right, but anyway it is the same argument but i do think you have this monolith of transports and to have that be, you know, a proxy for the market doesn't make sense. i mean the airlines, which i have some airlines, they seem to be great although every time i hang on too long. >> which are you long? >> delta, america, unite fltd. but the transport to me is a bigger story actually, the rail part of it. as brian said, csx is coming out with -- this is what i'm afraid of with the trade situation, that the uncertainty -- they're looking -- you know, their second half is going to be down and, you know, we're seeing uncertainty. so for a while the market has
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been trading on this tide of macro events now we are getting into the nitty-gritty, the earnings that's what i like to see. so to see rail earnings like this -- >> yeah. >> -- be this disappointing, that in a way -- >> jeff, it is funny, because the two railroads you would think would be most smacked down by the trade fight, at least with canada and mexico, canadian pacific and kansas city southern which has most of the revenue crossing the border. they're up 32% and 28% this year are you surprised? >> i am a little surprised look at the transports more broadly. it has been a nice move. i would like to see them doing a little bit better, but as a broad index they're below the highs previously to believe the move i want to see a breakout past the old all-time highs if i'm optimistic i think that maybe this supports our view we are going to see a cyclical bottoming in pmis. i think you are still seeing tighter financial conditions flow through the economy i think lower interest rates will start to support pmi, which
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i think is a good thing. if you are looking for confirmation for the market overall, i think there's things out there to look at if you look at the breadth of the market, it is widening out. >> in a good way. >> in a good way, look at weighted indexes -- >> but volume has been terrible, lowest volume day since 2017. >> a couple of things don't tell the whole story. look at credit spread. the bbb credit spreads hit a 52-week low. thinking about liquidity, the credit markets, these are good things it is based on our work. we don't see sentiment as overly kpeeb ra exuberant at this point. you look at transport with a grain of salt, look at other areas of the market and the setup is generally good over the next six to eight months. >> does anybody believe the s&p market is overheated >> overheated is probably not the word i would use but i would be extremely cautious. i thing the biggest risk you have is that things stag nate,
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not that we necessarily go into a recession but because of the uncertainty things stag nate that's what you see in the earnings here. you have to wonder what the market does at that point. have we priced in too much at this point in time i would be incredibly cautious maybe we get a cyclical bottom but maybe we don't what if things stall that's a problem. >> one of the things that all of us have been doing for a long time, that history has told us, markets could remain up or irrational or overvalued, and i say it in air quotes, a lot longer than we think there were people in '98 who were saying, we're doomed, they were right but two years too early which means they were wrong. >> yes, absolutely one thing i would add is we talked about volumes, as you did a second ago, brian. when you look at the july volumes in the derivatives world which is what i look at not only because i came from that floor on the options floor in chicago, but when you look at when leverage was taken away after the financial crisis, where did the volume move? it moved into the world where i
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am, into the derivative side we are seeing right now low, low volumes to your point. i mean we're three million a day under the average. we only had three days -- >> in derivatives. >> in the derivatives. we only had three days so far in july that actually hit the average for the entire year at 19.3 million per day so we are seeing low volumes, which is odd because here we are in earnings season and you would expect to see the volumes rushing back in but we're not seeing those. >> what does it tell you other than there may be a lot of institutional interest >> it tells me participation right now is starting to back off a little bit we have volatility that is low karen and i were talking about this earlier, but protection right now is cheap we talk about it all the time and yet people don't like to hear it. when you can buy at these levels protection at 12.5 over a portfolio on the s&p 500, that's a great time to be a buyer. >> yes. >> but when it comes is when you have the hurricane to the side -- >> that's exactly. >> i say i'm cautious right now, not necessarily saying dump
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everything but why not buy puts with volatility at this level? why not protect yourself there are enough concerns out there you should be at least protected. that's my point. >> karen, it is like we look at low volume as a negative sometimes, but, you know, if you like your car, you keep it you hold on to it. i wonder if low volumes are telling us that there's no buyers but maybe there's no sellers either, that people are happy where they are and they're sticking with it. >> right well, so that's -- that piece reads a little complacency, a little i don't know, you could say complacent on either side as a buyer or seller. but to me pete's point is so on target the volatility is coming in here i'm long, always long no matter what, how scared or bullish i am, i'm always long. that's what i do i'm not going to sell things into, you know, a trade war that i'm afraid of, but i have to own protection if the vix is going to stay here, i got to buy more protection hopefully i will lose money on the market and continue to go up. >> brian, to your point about the market being able to stay expensive for longer than we think, i hate to make this
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argument because over the long term it is not a good one, but look at the equity risk premium with what rates have done. it continues to blow out there's no alternative it will be good in the short term for equities. it forces people out the risk curve. over the long term, look over the next decade, probably means lower returns for equities, but for now i feel people are being pushed into risk assets which is good for multiples. >> we have earnings out on one of the names you own, one of the transports, united airline phil lebeau, we will give you a couple of minutes to look through the numbers here how is united airlines looking >> they're strong numbers which is why the stock is moving a little higher, but there's a piece of news in the earnings report we will get to in a bit it comes down to this. strong domestic deman is td is e reason they beat on top and bottom of the sector quarter they raised the full year guidance, but for the second quarter in a row united will not detail the exact impact in terms of dollars and cents of having the 737 max grounded
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all of this raises the question, what is united's plan when it comes to dealing with the max? not that they have a lot of choices right now. so we're just -- everybody is clear here, they have extended how long that this plane is off the schedule through november 3rd the capacity is being brought down for the full year it was 5% to 6% growth, now they're saying, look, it may be 3% to 4% because they may not have the max back by end of the year 14 in the fleet have already been grounded. remember, they're scheduled to get another 16 this year realistically it is probably not going to happen, which may be the reason why buried deep within the note if you read all the way down you found that united in the second quarter purchased 19 used boeing 737 700s those will be into the fleet starting in december they're not disclosing the price nor are they disclosing who the seller is, but, guys, this speaks to the need to make sure they have the seat for their capacity growth plan as they
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move into 2020 so, again, they're buying 19 used boeing 737-700s we will be talking with ceo oscar munoz about this as well as a number of other things tomorrow morning you do not want to miss this interview exclusively on "squawk box" starting at 8:00 p.a.m. >> there will be a lot to discuss with him as well karen, start with you. you said you own it. the numbers are pretty good. >> the numbers are pretty good what is interesting, look at the run the stock had since the end of may here we are in the mid 90s it has been quite a run and the bar has been higher and higher and they put out earnings that even beat that all of that having been said though, the airlines -- it is time to do some pete's pay book and sell calls against it. >> which i have done i own united today i own southwest as well. today i rolled my calls out a little further into august and a little bit of upside to try to collect. i think the august '55s and i get a little over a dollar for those. i agree with you i don't know we're going to see
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the airlines absolutely take off -- no pun intended -- but i think they continue to grind higher if they're going to do that, i'm going to sell calls against it, brian, and be able to take in the premium and watch these things and they move to the upside and get protection to the down side. >> i guess a point to the question, a point would be you wonder how much earnings growth there is if the fleets are not getting any bigger planes can only be 100% full once they have the load factor jammed in on every flight -- >> capacity is growing a little bit too. >> but then you get to a point the fares are too high and people say, you know what -- >> they haven't gotten there yet though. >> and we all fly. >> all of us. >> and we don't see -- nobody around this table needs an analyst. >> right. >> to tell them about the airline business because we all have our own little cubicle at newark airport but you wonder where is that pricing power lost, where is the cap where the nonessential business traveler says, i can't swing it >> can i play out one other thing people forget about? now about the money delta makes
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through the american express deal and the partnership they've got there? that is a number that's free money coming into them for the most part. i mean it is incredible how much money they're making in different areas that people just seem to discount they look at just one specific metric i think there's other metrics to look at, and some of the partnerships are really starting to pay off as well. >> i would just say if you are worried about that -- and i think it is a legitimate concern, about at some point the pricing power isn't there. >> multiply coach from newark to cincinnati, people will say, you know what -- >> that's a problem. but look how the stock is trading. you have $100 is the high back in 2018. we are getting close to that, right? you can use that you can sell calls against that. you can use that as a place where you might want a target to sell out of them so i think it is -- it is not a bad point to say, listen, maybe there's a double top here. let's be cautious. >> hold on, guys we have a news alert on new skin the stock is taking after hours. seema mody, what is going on >> here is the story new skin is issuing a warning. it now sees second quarter earnings coming in below
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forecast, 82 to $0.84 versus the estimate of $0.94. the company says it is primarily due to a reduce revenue outlook in mainland china following the government's 100-day campaign to review and inspect the health products and direct selling industries the company also mentioned the negative impact of the stronger dollar you can see the stock is reacting, brian. it is down about 14% in extended trade. it also has been a tough year in general for the company. back to you. >> thank you, seema. stock down 25% this year, 39% over the past year it is one of the multi level marketing companies. >> yes. >> anybody here ever owned it? >> no. >> ever shorted it, bought options, ever used the product have you ever heard of new skin? >> not i i mean i use olive oil. >> you look great. >> thanks, i appreciate that. >> don't tell -- >> that's why it is trading so badly, olive oil. >> olive oil, that's all you need. >> i preferred wimpy, i thought he was the stronger character in
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"popeye. let's go back to candid transports it is funny, we focus on delta and united and everything like this, the best performing is not only aleaglegiant, a small compy but one "60 minutes" did a deep dive and scare piece on it, but the market didn't care there are so many weird things going on with the names in this space. >> i wouldn't want to touch allegiant. i won't want to touch them for an investment, nor would i want to necessarily fly on them that's my personal decision. i happen to think you stick with the majors though because if there's going to be any type of pricing power, they're the ones that have it the planes are still full and there's still a little more. >> don't dabble maybe in the smaller cap transports is what you are saying coming up, facebook facing congress and feeling the heat, but will congress's anger hurt the company or their shareholders plus, there is one chart jeff mills says could help you catch up to this record rally. one group that hasn't come along for the ride yet but cldou as always we are live from times
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on your wireless bill. xfinity mobile has the best network. best devices. best value. simple. easy. awesome. click, call or visit a store today. welcome back to "fast money", everybody. the s&p 500 is hovering near record highs, but the little guys really haven't been coming along for the ride
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small caps down nearly 10% from their 52-week highs, but let's look at the chart of the day that jeff mills of pnc brought along. jeff, you say something, something good may start to be bubbling y bubbling up for the russell 2000 what do you see? >> i will get to the details of the chart in a second, but one of the questions we get from advisers and clients all the time, look at the divergence between small and large. is it telling us something about the sustainability of the rally. it could be problematic, there could be bearish complications because small caps are not keeping up s&p 500 all time high, 10% away from the all time high this only happened three times in the past 40 years we went back and looked at, well, what happened during those three periods. it is not necessarily a robust sample size but what we saw in every one of the periods was small caps eventually catch up and make their all-time highs. again, not a huge sample size but gives us an idea what might happen in this environment like i mentioned credit spreads before, they still look pretty good
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i don't think small caps lagging is necessarily a commentary there's risk aversion in the market and the s&p can't sustain its highs. i think it may be more of a commentary on the fact that bank for example are the largest interest group by far in the russell. it may be an individual industry group problem there. you go to the chart. the russell hasn't made of progress to the high time highs. but you are seeing on the surface new 20-day high list, starting to expand you are crossing the 35% threshold there. 35% of issues in the russell are now making one-month highs this is generally a good thing when you look at the returns in the russell over the next six to 12 months. so if history is any guide, if this internal expansion we are seeing within the index is any guide, we could see a catch-up in small caps over the next number of months. >> because the gap, jeff, between the small caps and the s&p 500, i don't know if it has never been wider, but it is really wide in terms of the performance over the last year or so. they're just doing this. >> that's exactly right. i think a lot has to do with the interest rate environment we
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have been in and what is happening to banks i think it has been a big driver again, i don't know it is a commentary on the broader market, but to your point it only happened three times. it is very, very unusual for the gap to be this wide, but history tells us there's usually catch-up trade to be had and i like what is happening under the surface to the broadening of part pages. >> good stuff there. we are watching the small caps for more on the small caps and maybe what it means to the market, go to facebook's libra holding its own. top analysts will tell you the stocks that could be the big fnners of the crypto craze. liverom the nasdaq with much more "fast money" right after this (soft music)
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♪ welcome back to "fast money" we have got a news alert breaking right now on qualcomm josh lipton has the latest josh >> reporter: that's right, brian. headlines dropping here from qualcomm reuters is reported that the u.s. department of justice has
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asked a federal appeals court to pause in position of this antitrust ruling against qualcomm apparently with support from the energy and defense departments you recall back in may this judge ruled that the chip maker had violated antitrust laws, siding with the ftc, said qualcomm was suppressing competition. qualcomm disagreed with the conclusions and is filing for an appeal of that decision, but also asked the 9th circuit for a stay in other words put on hold two of the remedies until this appeal is heard, and now the u.s. government apparently saying, yes, you should grant that stay and qualcomm moving higher here in the after hours brian, back to you. >> guys, thank you very much josh lipton. stock is up about 3% on the news anybody here got a strong opinion on qualcomm? this has been a court case -- qualcomm and court case and litigation and settlement are words we used with the stock for the better part of five to seven years. >> that's been the bet on the stock, right if you are long on the stock you
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are betting that the court cases go their way. >> legal arbitrage effectively. >> yes it kind of goes to the idea the supply chains because of the trade war might be in jeopardy that's what i think is driving this some of what is going on with 5g, the dod and the department of energy need some of what they have for that. it could be kind of a side casualty of the trade war or benefit of the trade war. >> because of all of this litigation though, the problem i have with it is that is going to continue i think i don't know it is the last thing we will hear in the whole -- and it has been going on forever, as you mentioned, multiple years i bought micron there, bought the stock there, i added to an intel position i have and i added to amd call. i like the issues where i don't have to deal with the headaches of what is going to happen next and how long to expand this thing out. >> it is a good macro question, should you own a stock that is a legal arbitrage play, should you buy it unless you are a superstar, antitrust attorney or
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how a judge or jury is going to decide >> it is too complicated for me to try to figure out if the sweeping changes are implemented, if they lose here, they get the stay and they go and lose on appeal, it is too complicated. i agree with pete. other ways the try to play it -- >> don't own it, in other words. >> don't own it. too complicated for me. >> qualcomm is certainly a name. i mean it has done well. it is up 30 terse % in the last 12 months, 36% in the last six months. >> you have to think everything bad is priced in maybe it is. i don't know. >> there's always the 5g out there, that's going to change everything all right. sticking with technology, three major tech hearings on capitol hill today aditi roy is in san francisco hitting an angle let's start with aditi who has the latest from the google testimony. aditi. >> reporter: hi there, brian we have been monitoring the senate judiciary hearing on google and censorship. lawmakers have been asking tough questions of google policy
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chief, questions revolving around privacy and antitrust issues as well as another topic that mid headlines the last few days, whether or not google is working with the chinese government he was asked that by senator richard blumenthal earlier today and here is what he said >> have you found any evidence of infiltration of your management or your private data by chinese intel venezuela >> absolutely not, senator. >> has google made any decision about its contracts with the united states government based on pressure or in consultation with china >> absolutely not. >> has google turned over or in any way turned a blind eye to a leak of its software or private data to chinese intelligence >> absolutely not. we take extremely seriously that, the threat of any penetration of our systems >> reporter: and, again, google policy chief karen bottia there,
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denying that google is working with the chinese government. these comments are stemming from comments peter thiel made earlier this week, alleging that perhaps google is working with the chinese government, calling the company unpatriotic. that's something president trump responded to, saying he would be looking into that. we are continuing to monitor the hearing and will flag any further headlines on to you have back to you, brian. >> thank you very much facebook's new libra coin also hot topics on capitol hill today. more from the capitol of wall street which is washington, ylan mui with the details there. >> reporter: the banking committee held a hearing on if new banking currency libra they wanted to know how it would work and how facebook plans to make money on it, but ultimately their concerns boiled down to trust. >> trust is something you earn and facebook certainly hasn't
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earned it. >> what kind of faith do we have in libra >> can we agree that a banker should be trustworthy? >> i don't want to get into the technical stuff. i'm talking about the trust issue. >> mr. chairman, i wish we could trust facebook it is pretty clear there's almost nobody on this committee that does. >> reporter: now, i am over in the house where facebook along with google, amazon and apple just finished testifying before the judiciary committee as part of its broad antitrust investigation, and lawmakers here tried to make the case that these big tech giants are not only the dominant players in their space, sometimes they're the only players >> there is competition at facebook >> yes, congressman. there is we face fierce competition for all of the products and services that we offer. people come to -- >> who would be the competition, if i might >> so many of our competitors are -- >> or is that secret >> many of our competitors are sitting here at this table with me. >> i think you're in a unique
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chair, in a unique position among those who are seated at the table. >> reporter: now, brian, the companies tried to argue that they encourage innovation, not stifle it. back to you. >> ylan, thank you very much let's trade this, guys there's a lot to trade here. jeff, first off, pnc, a view on facebook i mean one of the biggest companies, most powerful companies in the world. >> we will take a view overall on technology for example. in this part of the business cycle where you may see a bit of a bottoming, but we don't think you will see a massive acceleration we think the companies in technology, the secular growers that can grow top and bottom line, more than, say, the broad market will require a premium from investors they will move into the names. we still like those names. as it relates to the antitrust, we went back with all of this going on, we looked at 50 years worth of data and perhaps not surprisingly, doj, ftc investigation, their underperformance before and after. but it is interesting. if you look at some of the larger cases, you look at the
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top ten market cap, only antitrust rulings were put against 11 of them the performance there is decidedly mixed. i think you are seeing the market give the benefit of the doubt because you are still seeing secular growth in the names. i mentioned the equally weighted index. techie equally weighted index doing very well versus the market weighted index. you can get broad exposure to technologies to companies to grow other than the names in the crosshairs here. >> we just talked about, karen, litigation risk. >> right. >> this is congressional risk, antitrust risk would it scare you off facebook, google >> no, i'm long. i hate it. google, i'm long i hate that also. >> you hate the stock or the -- >> i hate the environment. i hate watching things like the show i have to say i'm troubled by peter theo coming out and saying google may have engaged in seemingly treason us behavioous he is a big supporter of the president and google and the
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president saying, yes, let's take that up and look at it. it is troubling that he can do that and the president will react as he did. but they're all under the gun, i get that. >> peter founded palontier, i know peter a bit he may have a view that wasn't clear. what do you think? >> i will say this, i own facebook and have for a long time i think the more regulatory comes down the better it is for facebook, the more it keeps out competition. because of that, the amount they're pushing on that, as zuckerberg said, about a year ago when the stock was slammed it was because of the amount of money they said was going towards security they have so many verticals to make money right now, it is not just facebook which everybody focuses on it is instagram, it is messenger and the various ecommerce, and throw in libra. >> i know there are other factors, but when microsoft was attacked for anti-trust for the
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government, it took 15 years for the stock to get back to the level it was before the antitrust case. >> could be, but you have to remember microsoft -- >> i get it -- >> but microsoft's focus was wrong, right don't we look back -- >> that's why i said there were other factors. >> it was a huge one. >> waffle house. >> waffle hut. >> it is from the noon. >> love you, brother. >> we mentioned facebook's new libra coin but your next guest says libra's role to regulation may have a bumpy ride ahead. let's bring in lisa ellis, senior manager at moffatt. first of all, do you think libra will ever exist? do you think it will be aloud by the u.s. government? >> we put the probability of that on reasonably low if you define success as libra gets off the ground and is used as a functioning alternative currency in, say, ten developing markets where they suffer from very high inflation, we probably would, you know, just to put a number on it put the probability
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of getting there at probably less than 20%. certainly the time frame measured in years, you know, three, five or more years. >> wow! so don't -- you can own facebook but don't buy facebook because of libra or calibra, its parent? >> i think that's right. there's a huge opportunity in facebook for ecommerce using the normal old fiat currency types, you know, through instagram and what they're starting to do with instagram checkout, there facebook marketplace and extending the early initiatives they've got around ecommerce that is certainly a reason to be bullish about facebook, but, you know, libra is in many ways, it is very futuristic, it is very experimental you know, it is something, you know, that would be years away in terms of financial impact >> you know what is interesting, lisa, this is a little off topic, but we just talked about microsoft. do you remember -- i don't know how long you have been following microsoft. do you remember microsoft effectively tried to create its
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own, not block chain but with zoon, their music player they had their own payment system in a way. you bought points. it didn't work for a lot of reasons we just talked about, but will this affect the payments, the paypales of the world or can everybody kind of get along if this ultimately is approved >> reporter: ye >> yes, it is being designed in a way they're working together, paypal, visa, mastercard, pretty notably all raised their hands to participate, or at least an indication they would be willing or interested in participating guess. at this point it is non-binding in this libra association. so they're all planning to roll up their sleefves and try to wor together to figure out if there is a design and an application of crypto in payments. it is early at this point but they're trying to collaborate on
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the initiative. >> hey, lisa it is b.k. i'm curious. with did facebook do this? they didn't have to. they had to anticipate there would be a lot of regulatory push back. what else is going on here are they trying to use the technology in a different way or what do you think? >> well, i do think they look at their user base, and the striking thing about facebook's user base across all of the platforms is something like 70% of it is in developing markets, like not in the u.s. and in europe, in north america or europe and when they look at enabling or empowering commerce for those users, literally, you know, a billion plus, 1.6, 1.7 users, a big enabler of commerce for the users is actually enabling financial services, enabling payments a cryptocurrency which can fuvgs as an alternative to fee at currency, as sort of this global currency not subject to the very, very high inflation, sometimes, you know, some
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government controls around currencies, that's really what they're after. they're after empowering commerce in -- you know, there's close to 100 countries around the world that the weo qualifies as high inflation countries. it is like those countries where actually many, many millions of individuals in the population are actually on the facebook platform, usually on whatsapp. >> lisa ellis of moffett nathanson. thank you very much. bk, what is your prediction? will libra exist will libra succeed >> i think libra will exist. i think it is going to be a longer road than a lot of other people expected. will it succeed? i think it is going to be -- it will probably work as a payment system that's what they're trying to do my view on this, what they're trying to do is compete with we chat they're trying to make a super app and that's why they added the paint part to it. >> think it is going to work >> i think it depends what you define work. it won't be a threat to bitcoin.
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>> i think we're making too much of it. basically eliminate the need to type in your paypal elimination or something. >> exactly. >> you have a bank account. >> it is a payment system. >> you want to buy something from your store. >> i don't get the difference between that and venmo. >> i feel like it is like ebay, trying to sell stuff we got to go domino's getting sliced, sinking on the back of its earnings. the ceo just sat down with jim we will bring you hips comments ahead about what happened, what he thought of the quarter. plus, netflix out with their numbers after the bell media mogul tom rogers says the stock is virtually unbreakable in the streaming wars. we'll find out whahat s him so bullish. he is coming up next here on "fast money" stick around is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives,
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risks, charges and expenses. go to for a prospectus containing this information. read it carefully.
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>> all right netflix is gearing up for results tomorrow i'm not going to say earnings because we don't know if they're going to earn anything stock is up more than 35% this year the streaming wars certainly are heating up let's bring in tom rogers, executive chairman of wind view, also a former ceo of t voe and former nbc executive and a guy closely associated with this fine network thank you, tom. >> thanks for having me. >> good some see you as well do you think there will be earnings in netflix's earning report will they make real money? >> yes, they have gap money. what they don't have yet is free cash flow and they have a pretty deep hole on the cash flow side. projections are $3.5 billion of cash loss just this year i don't think that really goes to the essence of the story though
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what we're not going to know this quarter is anything about "friends" or friend situatsy we won't know what it means to lose content, because it hasn't taken effect for a while the friendsy meaning hbo max, apple plus, disney plus, we won't know the effect of any of that stuff yet because it hasn't launched what we're going to know is the pricing power that netflix has because over the quarter they took some major price increases, both domestically and abroad 15% to 18% domestically, the standard and the premium package up two bucks similar types of price increases in western europe. you have western european countries where netflix on the euro basis is actually more expensive than the u.s we're going to see whether or not there is churn there, whether they really had disruption or they were able to hold the base with those price increases. now, expectations are very low for u.s. domestic subs, less than half a million.
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my guess is they're going to beat on that because they projected very low guidance on the u.s. -- >> a little sandbag maybe perhaps by netflix >> well, you know -- >> we've seen "stranger things" than that. >> good one. >> very good. >> i got no credit for "friends" and friendsy, but you say "stranger things" -- >> because "friends" is moving to at&t's warner media. >> yes. >> so here is the thing. you helped build cnbc. it is the wealthiest audience in television, so maybe our audience is not best for this. but if i go to apple which i use at home, how many streaming platforms do you believe the middle class family, the bread and butter of this country is realistically going to afford or can afford >> well, it is a great question because as people cut the cord -- and i actually think this quarter we will see some record cord cutting, and that's going to raise the issue of, okay, as people cut the cord how
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many streaming service they're going to take on, your question. my view is netflix is going to be the overwhelming base streaming service in everybody's home there's going to be a fight between everybody else as to what the second, third, fourth streaming service is going to be, but netflix is spending so much more money than anybody else when you look at hbo talking about hbo max having a couple extra bucks, going to $17, even assume half of hbo's 38 million subs take that $2, that's $300, $$400 million of incremental revenue a year netflix is going from 15 billion to 20 billion of programming cost over a year nobody else is going to touch that that is going to be the mainstay as a result of the original programming because it is original programming that drives new subs and, quite frankly, holds subs. >> all right so let me ask you, so you're saying netflix is way out ahead and nobody else is close of the disney, of at&t and whatever else is out there in
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over-the-top space, who has a chance of surviving? not all of them can. where is apple >> i think there will be room for multiple players when you think about what is a little detached from reality, disney has gotten $50 billion of incremental market cap since it made its streaming announcement in april it has a few million subs on espn plus, hasn't launched disney plus. hulu will be able to go international but hasn't announced numbers on it whatsoever, and they have to buy back comcast, a third of it, at full market price in five years. there's a lot of risk there and they're getting $15 billion, about one third of netflix' market cap does it mean disney is going to make it? i think they probably will, but i don't think that it is going to necessarily mean that we have this massively transformed company going on a clear upward
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trajectory that looks like -- >> i know we're tight on time, tom bei tom, but with the exception of betting in europe, wind view. >> thank you. >> what is the most exciting company you see right now? >> the most exciting company i see right now in the space has to be netflix. >> really, still there's no young buck coming, you're like, that's a company to watch? >> netflix is in bangladesh, it is in nigeria, it is in ethiopia i would like to see the hbo max plan for entry into ethiopia and their u.s. denominated dollars being paid there the hit against netflix is it subs internationally aren't worth very much. their average subs, they're nearing 100 million subs there their average subs are $9 to $10. they took a 25% price increase in japan, 19% in canada. there's a lot of room on this thing still. i think if i had to pick something that's really exciting, it is that one. >> and, tom, i remember people on this network years ago saying, dvds by mail will never work, nobody wants that, we've
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got blockbuster video. >> or 20 million subs, they were going to have to cut price to get growth. >> and they've done well tom rogers, windview it is a pleasure to get your views. netflix. >> love it. >> most exciting company out there still and you love it. >> i do. >> you're not cash flow positive, maybe never will be? >> well, if they never will be we have a problem but plenty of companies burned through cash like that. it is all about the original content and that's what they have to do right now, and let's keep it. >> amazon did it for 20 years, didn't it? >> yes. >> just burned through cash. >> i owned netflix and bought it a little over a year ago i pitched this one as well and everybody voted against me why? because they didn't see the vision he sees right now in terms of international power and -- >> i change my vote now. >> i appreciate it. >> now that everybody sees that view, that's why he founded -- >> he has the vision. >> all right still ahead, energy getting slammed today. one trader says more pain to
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come it is not going to get better. we will break it out and talk about why. check out the cramer cam, jim cramer speaking with domino's ceo. that stock was roasted today we will bring you those comments right after the break. ♪ and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley.
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all right. welcome back to "fast money" the standout stock and not in a good way was domino's pizza, sinking 9% they reported disappointing sales this morning ceo rich alison commenting on that and growing delivery
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competition with our own jim cramer moments ago >> part of what we're going to see here in the near term is that, you know, there's so much investor subsidy into the business model right now, we're not really sure where it is going to shake out long term because there's substantial discounting and over investment in advertising right now to drive consumer demand. we don't know how that's going to shake out once consumers actually have to pay the full cost of that delivery because those fees are quite substantial relative to the cost of the underlying food. >> all right you can catch that full interview tonight of course on "mad money" at 6:00 p.m. eastern. i know you both have points on domino's >> these numbers are not horrible, just not growing as fast as the street expected. the question becomes, you know, everybody is concerned about patrick doyle retiring, is the growth over, he was a visionary there. what impact is pizza hut having
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on it? ritch alison talked about the fact you can get delivery anywhere, it is not that unique. to me it is a no touch because of those reasons. >> no touch. jeff >> looking at the chart after the move we saw after the hours, it broke below the 50-day, below the 100-day. i think in the near term you could see more weakness in the stock. the debt levels in the company are relatively high so i think it tlim i.t.s the company's flexibility going forward. when you look at domino's compared to peers, the international footprint is larger i think domino's is a little bit more exposed there for now we are staying away. >> two no goes we are going to talk energy stock because they were taken down one trader betting that the oil le will continue details after the break. ur hear. your joints... or your digestion... so why wouldn't you take something for the most important part of you...
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zblrjs welcome back to "fast money" crude oil prices falling today on comments from seth of state michael pompeo, who said in a cabinet meeting that iran is prepared to negotiate with the u.s. about its missile program that also brought down energy stocks energy had been doing well this summer but still the second worst performing sector in the s&p this year. options traders think there's trouble ahead for one of the group's top performers in the last month mike khouw joining us from san francisco with that name and why. mike >> yes so we're taking a look at one of the largest oil service companies, schlumberger. we have seen open interest in
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the august 3, '71/2 puts rising as well. today we saw well over two times the average daily put volume, the result of a 4,000 lot put spread the august 307.5, november 7.5 put spread was traded over a dollar so the person buying the spread is laying out a little over $400,000 in premium to extend the bearish bet they've been having on basically over the course of the last month out to november if that trade is going to be profitable, they will have to fall at least 10%, the down side break even here. we have seen the names build essentially as they've gotten a rally off the higher crude prices and i think they're capitalizing on the idea it might not last. >> mike khouw in san francisco as always for "options action" check out the llfu show on friday, 5:30 p.m. eastern time up next, your final trades what do you look for when you trade? i want free access to research. yep, td ameritrade's got that.
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free access to every platform. yeah, that too. 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. ♪
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♪ >> time for your final trade let's go around the horn pete najarian. >> a minnesota company that's not traded well for a long time but i think ready to make the turn to the upside 3m, gitty-up. >> all right karen. >> talking about the strength of the airlines which is great, however, these things should be traded so time to sell some calls against united >> all right bk. >> i like that i think you go broader and you sell the entire transport iyt. i think it is going lower. >> boy, hate on the transports
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pnc? >> positioning in copper looks very short right now look for a near turn reversal. we think the price of copper is going higher. >> good economic signs perhaps jeff mills, great job as always. thank you for taking it easy. >> thank you, my mission is simple, to make 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 cramericcramerica. other people want to make friends, i'm trying to make you money. my job is not just to entertain, educate, teach, call me 1800 hfr -743-cnbc or tweet me. somebody


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