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tv   Fast Money  CNBC  February 1, 2016 5:00pm-6:01pm EST

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call. they could say we expect elevated expenses in the back half of the year and could say anything. >> we'll have to tune in 9:30 tomorrow morning to make it official. for now that does it for us on "closing bell." mike and kayla, thank you so much. "fast money" begins right now. "fast money" does start right now. live from the nasdaq market site overlooking new york city's times square i'm melissa least. traders are tim seymour, dan nathan, karen finerman and guy adami. tonight, stocks in a three-day winning streak and one classic market theory says take profits now. there is more pain to could. we will explain. plus, chipotle has been cleared of e. coli, but there could be something else that might begin to weigh on the stock as early as tomorrow. a top analyst weighs in. later, boon pickens out with a bold call saying oil is heading to 452 bucks a barrel but dennis gartman says he is mixing something very important about the crude equation, be a he'll us what that is and what it could mean for markets. first starting off with alphabet. we know it's google surging in
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the after hour session, passing apple now to become the world's most valuable company. is this perhaps signaling that stocks may have gone a little bit oversold at this point? guy? >> i think alphabet is about alphabet and karen had great insight into this last week. i think across the desk we've had different degrees of bullishness. this takes it to an all-time high. personally at 22 times forward earnings. i don't think it's that expensi expensive. it has room to meet and grow in terms of multiples. paid clicks were up 21%. the street was looking for two-thirds of that, and they were able to maintain effectively the operating margins that they said they were going to get. i think that's encouraging. can the stock pull back down to 775, 70? >> i think so yes. >> do we know what the other core businesses have done and the other bets have done?
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karen, what did you learn from that? >> it was hard to guess exactly, but tim and i were talking before the show, 2 billion to 4 billion issues have ranged from what the other bets were, came at 3.5, i don't know whether most people included that common stock based compensation which i always think you should include but just to see the core business and how unbelievably powerful that is. i think we got a sense of it from facebook that the pie is growing, not that facebook is necessarily taking away share, but this is a very, very powerful business there. now, unfortunately, you know, what's next. people look at, okay, now the earnings are out there 30 minutes old or whatever is next. love to see some capitalization and love to see that on the call and this is a great story. >> re-rating on the stock or do we need to re-rate it. >> what's interesting, actually the irony of the stock is it is trade at a much higher multiple. the stock somewhere right now is 22, 23 times growing it, 24 times fx neutrals on revenue so i think the stocks should trade above 30 if you want to put it in a class of companies that
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will give you this kind of growth, and now that they have the transparency both in terms of the structure and how they have broken out. karen has talked about 3.5 and 3.6 on the loss here or the cost side of those businesses, that's positive. the irony here is reporting a nice healthy loss. >> i think it's a very, very exciting day. i think it's very interesting for facebook. >> i've got to tell you, it does trade about 30 times gap. so this is something that we'd really consider when you think about the fact, you know, that this company just overtook apple in market cap today, right now as we speak. apple reports on a gap basis. these guys don't, so if you take that visor of 27.5 on a gap basis you get to 30 times earnings and it's growing mid-teens. i don't think you run out and buy it on this print. i think they are doing a lot of things well. one of the most important things here is this. if you think back to apple a few years ago as they were getting into the smartphone cycle, had a
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massive runway here. they had the products. they had the ecosystem. they had everything. that's what's going on obviously with facebook and goggle right now. there's a massive sector shift going in on online advertising, and they are there and they are capturing. it not just online advertising, it's surge and video and the list goes on and on and these are the two but i don't think you buy it at an all-time high. >> are you concerned about valuation on alphabet at this point in time? >> i think it deserves a premium valvation. how big, i don't know. could it pull back? of course. if you sold it on the pullback you would have been wrong for the last, i don't know, six quarters. so i'm not going to trade around it. i -- the irony here, the bets, i think that's a higher multiple. >> back to the broader question, does this signal anything about the markets? facebook and google, nice strong quarters, huge swings to the upside here. >> i think it speaks a lot to these companies. >> okay. >> and it's very, very kind of rewarding or feels good to actually be talking about companies who are performing on their merit who are
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somewhaticslated from global turmoil. google gets their revenues international so, you know, uk, sorry the brits are counted in there. i think that's a very interesting time for markets because ultimately we're in a place where these two companies are showing a structural paradigm shift where people are buying stuff and where advertisers have to go. there is a zero sum game because i think these guys are chewing these guys up. we've had the fed on the tape saying things aren't so good. this was really very impressive and i think the market needed it. >> i'm taking a look at forward pe straight up, according to thompson is 27 or so. hormell -- >> ex-cash. >> no, just straight up. hormel is trading at a higher forward pe and clorox is trading at a higher pe. >> that's spam, by the way.
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>> on nice white toast. >> so we're willing to reward the momentum and stocks that are delivering that had the momentum and on the other side of it we're playing this extreme defensive position here. >> throw apple on that extreme, throw that in on the google side of the equation as well. i think there's some -- i can't speak intelligently about hormell but i will say there's probably some takeout premium in that multiple given the environment we're in. >> clorox, kimberly clark, you go down the list. >> exactly. >> the question about the broader market, pretty good conversation on friday about the market and where we all stood. i will say this. on positive side of thing, you know, we traded down to 1920 today in the s&p, a day where the market could have given back a lot. held exactly level that we had flagged as a pivot point. what does that mean? well, past resistance becomes support. you saw it today. now i still think there's some serious head winds out there for the market but if you let price be your guide which i say from time to time, the fact that we held 19 and 20 today is
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encouraging. if nothing else, 19, 20, gives you something else to trade on the long trade. >> the classic theory is pointing to more losses ahead. let's go off to carter wirth. what are you seeing? >> extreme behavior of spam. only three sectors up and it's teleco, utilities and staples. telco is not a real sector. we're really being led by utilities and i wanted to look at the spread right now. this is a trailing one-month basis, but what's important is these are some of the oldest aggregates in the world. this data goes back to the 1900s, and what you have here is a spread that you can see of almost 1,300 basis points meaning first month of the year the utilities outperforming the industrials to that extent, hold that thought and we'll let some charts out there and with a very slide here show here's the
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optics of it, two indices and we see the pulling away of utilities and the spread there which is here newarkicically. okay. what we know is the issues are an entire bull market and an '09 low and the utilities basically asenned, sure, but they have underperformed as would be expected in a bull market, but for the first time now since '09 we are now starting to get above the relative downtrend line that's been in effect the entire bull. this is the kind of thing that happens when things are not right or when you're moving to a defensive posture because long only month and 90% of the capital is long only and has to be defensive when things aren't exactly right so where i think this is going. this is the x lu, a nice formation. again, can you draw the lines any way you want, but i think we'll break out from this top and we're going to make a run for the highs of about seven, eight month ago. now, back to the first slide. i went back and looked.
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1900 to present. all januarys where there was a spread, utilities over industrials of 1,000 basis points or more. only happened one january, and it was january of of 2007. it was not a good year for the market. >> wow. >> yeah. >> cbw. >> that's heavy. >> carter, what does it look like for consumer staple stocks since we're sort of, you know -- >> those are -- those people are desperate for growth and desperate for yield. there's no income, rates back below 2% of the ten-year treasury an anything that won't hurt in the mind of the investor anyway, if you continue to have some sort of income or great growth like google or facebook i'll pay you the multiple because i don't want the interview. >> carter worth, thank you. >> dan, you had a long position, didn't you, in utilities and you closed it in. >> and telco. when you see these things go out in a straight line and outperform like that as a trader i kind of take what the market is willing to give me. what carter is saying he expects
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some of the performance to go. staples on friday, put a defined risk in the xlp, the staples etf because i also think when you think about the components of it, he says they are going to trade for the yield and you're talking about hormell. most of the things in the staples are 22 time and 52% revenue exposure outside the u.s. and pick for a yield and no growth. >> i would say it feels a little different this time how oversold the utilities were last time so typically when utilities have this kind of move it's usually time not to buy and dan got out out of a position and did very well but when you have a relatively underperformance i think valuations right now in fact are very much in line with their all-time kind of averages and should be a place where people want to own them and the defensive environment and i think they will continue to with the yield environment. >> do you buy that? >> i'll give you one more defensive thing. >> okay. >> you've never seen carter braxton worth and ken shell in
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the same room tate. carter is ken shell, and at any rate. kaiser. anyway, gold miners up 3%. gold has a stealth rally over the last couple of weeks. that adding to what carter just said could be a harbinger of not so great things to come up. >> next, one longtime tesla bull is losing faith. find out what morgan stanley slashed the price by 26% and why the stock rallied on the news and is the worst over for beaten down chipotle or chipotle? >> the headlines in the cdc has been soaring today but something else could weigh on the name. the google call well under way and the stock is rallying and the headlines on the quarter when "fast money" returns. seizing opportunity. and i'd like to... cut. so i'm gonna take this opportunity to direct. thank you, we'll call you. evening, film noir, smoke, atmosphere...
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rising competition. dan? >> you know, the stock this morning got down to a level that guy has been high loyaltying. basically the 52-week low is down in the low 180s, 181 and balanced there last week again. morgan stanley, the biggest bull in the stock cuts the rating and saying they are not going to hit their mass market model three car in 2017 people have to start thinking about what do we have between now and then? we have a model "x" which they made 5,000 of last year. it's not a mass market stock yet in my opinion. they need to get to the model three and stop with the xl all together. >> they just started with the "x." >> that's the point. they need to get to this car where poem will be driving at a $40,000 price point. >> adam joan as is saying the mass market car is now probably going to debut for an average selling price of $60,000 versus the 35,000 they hurricane georgesly thought it was going to debut at. >> i know what dan is saying.
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let remove some of the noise around this and get back to a core business. get back to battery storage. that's really what this thing is all about. i repeat. this should be trading much more like an auto company and not a tech company and the fact that the biggest bull or one of them hon the street downgrades the stock should not be a cause for real. i get how the stocks respond to a downgrade. better than expected. this isn't good news, people. >> not good news. >> but the price target is still 68% higher than where it closed today. >> and still an overweight rating. >> and it held the level dan just talked about it. if it holds 110, the april low, it will give you something to trade against. traded down to 182 and change today. you saw the bounce. again, it's all about risk/reward and, again, it sets up rather favorably on the long side. >> the street is very mixed on it. all used to be one-sided and everybody was wildly bullish, very bullish or bearish you can't count on everybody going your way because it's in the mix already. i think that's a no touch here.
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>> next up, netflix, a big day of gains for it the stock after "forbes" say apple may be interested in an takeover. it would offer unmatched content for streaming video, entertainment and video services. >> i can't speak to an apple takeover. no information on this and won't respond to the "forbes" article and i think $90 first of all is a place where if the stock doesn't hold again the stock goes down significantly lower. last earnings numbers, showed major saturation of the u.s. market. i think the international market will not even be the same growth market as the u.s. market for cultural reasons. some markets yes, some marks no. i don't chase this move at all. >> this is the strongest day for netflix in quite some time and it was on this rumor basically, this unfounded report. >> i mean, this would be a very, very big deal, right, so market cap of 40 billion, let's say $50 billion. that's not really their m.o.
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>> no. >> not at all. >> yeah. >> i think you're actually being fair and closer probably to 60, 56 if they wanted to get it done which is obviously not going to happen. tim it right. salt rated in the u.s. you believe -- if you don't believe they can grow at that pace internationally, you absolutely set stock. if you think you can then you buy it against the $90 level that tim just talked about. >> is this rumor more of a statement of apple's distress in terms of trying to find the next catalyst or netflix's distress in terms of the last earnings report? >> here's the thing about apple. they are having a tough time getting a subscription video product out and really wanted to relaunch it with the apple tv last fall and wasn't able to do it. netflix solved some problem and to meet fact of the matter is the minute a israel does the deals with the studio and gets the contents and has the streaming service these when netflix is going to go much lower and that's when they have to buy the cow when they can get
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the milk for free so they will be very, very happy to be allowed on apple tv. >> one trader is baking a very bearish bet on one of the dow components today. the name and what it could mean for the rally when we come back. i'm melissa lee, you're watching "fast money" on cnbc, first in business worldwide. >> what do these two people have in common? both are at the forefront of the tech rumor mill, so we're sorting through the headlines and separating fact from fiction on whether twitter is up for sale and if marisa's days in the yahoo! "c" suite are numbered. plus, something very strange is happening in the market. >> and it's got the commodities king dennis gartner saying something very bad is about to happen to stocks. find out what it is when "fast money" returns. ohh ah ah aflac! aaaaf-lac!
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welcome back to "fast money." i'm morgan brennan. check out shares of chipotle that closed up 4% after the cdc officially closed its investigation of the e. coli outbreak's link to the burrito chain saying that, quote, they appear to be over. as expected, federal officials were not able to identify the contaminated ingredient that caused more than 50 people in multiple states to become sick.
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the most recent illness reported to the cdc began on december 1st so two months since a new case was detected. chipotle saying it's, quote, pleased that the investigation has been concluded. once again, calling attention to the tighter food prep protocols that it has been adopting in the wake of all of this. today's news coming ahead of the company's fourth quarter earnings after the bell tomorrow. last month the company warned that q4 same-store sales would likely be down 14.6% and then adding at the icr conference later in the month that 2016 would be a, quote, messy year for earnings and margins. analysts expect that earnings plunged 52% to $1.85 per share on revenue of $1 billion. since the first cases came to light in early november, shares are down about 25%, almost 26%. >> morgan brennan, thank you. so is the worst over for chipotle? joining to us discuss from new orleans is piper jaffrey managing director nicole miller regan who focuses on the restaurant sector.
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>> good afternoon, everyone. >> is not just the worst open but when does the upswing happen and even though the cdc cleared chipotle we still don't know what the cause of the outbreak was and complaint costs could be a little bit higher as they roll them out to the country to all of their restaurants and the customers who switched, are they going to go ahead right back to chipotle now that the cdc says all clear? >> i think it will take a little time. that's what our model would suggest. i think the good news is for tomorrow night's print everyone is aligned, the street, the management are aligned how much comp will be down. probably the next catalyst for shares, you know, looking into tomorrow night what does 1q look like so far. >> in terms what have you'll be asking? you want to see traction that they are gaining back the people who may have switched? will we see that so soon? >> i think we'll be care from to caution investors. never been a case in the history of restaurants where something of this magnitude has happened and there's a snap back in same-store sales so i wouldn't want anyone to expect that
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especially considering they will close stores for the peak mill period to talk to employees about the situation. i think what we want to understand is the strategy coming out of the closure from the cdc today that, you know, that they can move forward and what will that strategy look like and how will they talk to consumer going forward. >> how do you put a multiple on this or let me ask you differently and this was a very high multiple stock in its space because of very legitimate growth? what do you do of that multiple, risks attached to it and this company was trading at 40 times so assume we get back in 2017 so it sounds like we're being caution and we start to normalize. what's the multiple on the stock considering where they have come and even if it hadn't had a food scare, this was an expensive company by multiple. >> absolutely. we did publish the fiscal estimates to initiate a better grounded conversation around valuation. it's a turn or two on ebitda to
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its -- to basically the entire restaurant group, and would i say it's starting to be a really fair multiple in the short term because it's a very solid balance sheet. it's phenomenal unit level economics, even with comps down 30% and we still think a very good management team. >> nicole, going leave it for there. thanks for joining us, nicole miller regan of piper jaffrey. what do you think? would you look at it? >> you know, it's still too expensive but i'm curious, mcdonald's, which has had a superb run. how much of what they have been doing in the last two, three months has been at the expense of chipotle and how much will they lose if chipotle gets back on its feet. >> mcdonald's isn't selling burritos. people think there's a one-for-one correlation with burgers and burritos. i've heard this argument before and i guess i think it's crazy. it's two different formats. >> where are they going? >> qudoba. >> that's where they are going. the suits they are lining up in manhattan to go to cmg are -- i don't feel comfortable about the
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lettuce i'm going to go to lettuce and get a big mac. >> maybe the family driving in the car at the strip mall. i don't know. we've had analysts come on saying barna was going to gain from chipotle and that didn't make sense. bread bowls and burritos are similar. >> what's being lost is this is a very high quality product. >> yeah. >> the company was growing sales at 20% plus for the last five years and they were taking share, i don't know who from, but from a lot of people. in the same period of time over the last few years until things have stabilized at mcdonald's. mcdonald's sales have declined 10%, 15% so if the sentiment gets washed out sometime they soon, the best thing for existing shareholders right here would be a massive kitchen sink of 2016. let the stock get slope and own it for a while. these guys don't have a single store overseas. we spent a lot of time talking about yum. >> used to be a good thing in this environment. >> great opportunity for the future. >> but the stock to me was
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trading at 45 times numbers and to say that they can grow in every place like they are getting the suits flying up to manhattan is crazy. look, i think the company will normalize. it will get back to a reasonable multiple, 30 times 17 bucks in 2017 to 510 stock. wouldn't chase it much higher. >> we spent the beginning of the show why google deserves a premium multiple. this is a premium brand with a premium product and had a real massive hiccup. facebook and google, they have also in their histories have had hiccups, you know what i mean for a while, a period a couple years ago. to me it's like a nike/starbucks sort of thing which is 30 times. >> that's where i think it goes. >> kind of there. >> i don't know how the cdc gives them an all clear when chipotle doesn't know what's causing this. that's obviously a different issue. waited too long to clothes stores, that's another issue but i agree with dan. if they kitchen this thing and it trades back down to 415, 420 like it did a couple weeks.
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for the stock maybe that's the all clear to get long the name. >> 475, talking about a 20% move from last week. >> you've seen moves like that in that stock, no question about it. >> a would you rather positive versus buffalo wild wings? i'm thinking about this objectively. >> still ahead, the tech rumor mill kicking into high gear on everything from twitter to yahoo! so who better to separate fact from fiction than the one and only bob peck of sun trust. find out what he thinks about a twitter day and are marissa mayer's days numbered? and take a look at alphabet, the call is wrapping up. we'll hear from the company right after this.
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>> reporter: so, melissa, the company's cfo began the call by taking a victory lap pointing out full-year revenue of some 75 billion, operating income of 23 billion. she have also reiterated why the company is now breaking out results in this way. take a listen. >> incrementalism in technology leads to irrelevance over time because change tends to be revolutionary, not evolutionary. this belief was the impetus for our organizational structure which enhances focus on opportunities within google and across alphabet. while also pushing our leaders to extend the frontiers that we are addressing. >> now, then it was pointed out that the there are search consumer products that have over a billion active users so we knew about youtube and play, but he pointed out that gmail can be added to that list and also had questions from analyst about the company's ambitions in the cloud, how they want to take on amazon and microsoft.
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of course, google has been making big hires here saying they have ambitions in the cloud, a natural place for google and said investors should expect that the cloud would be, in his words, a major investment area in 2016. melissa, back to you. >> josh lipton, thank you. for more on alphabet let's bring in bob peck who covers the stock with a buy rate and an 850 price target. what stood out to you on the conference call? >> thanks for having me. one is overall revenue, sfx and all the regions accelerating as well. number two, drive by volume increases, the things they sell, clicks, accelerated both on side and overall that. leaves a future monetization. all of this was done on better core margin so accept rate the two apart shows you how much more profitable the core, is 5-4-hundred bips or so. buying shares back. $2 billion buying shares around 250 and riot made the point they will be prudent about the cost
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spending but won't stop investing for the future which should drive future returns. >> now that there's greater transparency about other bets and the core business, bob, any surprises? anything emerge that would cause you to re-evaluate where you stand on the okay? >> they are spending go b $3.5 billion on the other bets than will continue to increase over time and they made that very clear and baked into analyst estimates so i think they are accounting for it. >> box how long do you have that part of the business, not really showing anything to the bottom line. >> so we've broken out all the businesses, youtube, double click, et cetera, and we have it being a cost center for the for seebol future for a couple of years or so and you know a lot of businesses, some generate a lot of revenue and some are much more longer term bets. >> bob peck, thanks so much. what's your trade here? >> the trade is stay long. listen, 2014, people forget. the stock traded up to an all-time high and spent the rest of the 2014 going down. into 2014 until -- until 2015
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until ruth porate was hired in may of last year to be a ceo. within a month the stock bottomed out at 525 and off to the race ever since. why? because nobody worries about them spending money haphazardly. they got their ducks in order. i know dan an i and everybody had a conversation about valuation. i still think it's cheap. >> that's real el interesting. before these numbers bob peck, and he'll talk about if when he comes on, $34.75 for 2016 estimates for this com. they have to go up here based upon these numbers. that puts them at around 20, 21 times. i don't know where the multiples should be, but i know it should be higher than where it is. i totally agree with guy on ruth porate. so many of this revaluation of this company has come from the moment she was named cfo and as we got into the breakdown of the structure so congratulations, she should be getting a big raise. >> you're concerned about valuation. >> i'm not -- listen, they -- i thought that's what the whole thing was at the top of the
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show. >> trying to pick it apart. a company, yeah, they do a lot of things really,ing really well but i want to make one point october 22nd, imporpted the q3 and the stock gapped the next month and it's much higher. for all you guys with fast fingers listening to the bullish parade here, you may get an opportunity to buy it with a seven handle >> no twitter but still pretty good, dan. >> yeah. >> just took a crack at me. >> i hope we get to talk about twitter because when i saw the headline this morning and the stock up 10%, timely i can get out. >> that's good stuff. dan knows a lot. >> the haircut, fantastic. >> that's good. >> no kidding. >> speaking of twitter. let's get back to bob peck. fact or fiction, a number of rumors swirling around the tech sector. stocks that he covers so let's start first with yahoo! set for
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earnings. >> top ten questions, will they seek an active process from the consider? we think they should and investors will push for that and if they do tit will be sold and then the questions of whether she will stay or go. >> march is the deadline in which they would have to number nate. >> the window opens february 25th. somewhere in that pier. i don't think you necessarily wait until the last day but once february 25th kicks off somewhere we'll see a slate nominated by them, probably and at that point you'll see a little more pressure on the board to actually listen to any overtures that they have had that are credible. >> silver lake, marc andreessen and silver lake denied the report. here's the question. is the beaten down stock up for sale? fact or fiction? >> a couple of things. started full time since september and started rolling out a bunch of products. don't think the board is
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necessarily receptive to selling already. however, if these new products dave rolled out don't start to materialize or week we think they have a fiduciary responsibility to listen to offers but quite honestly in the second idea. it's critical to show that anthony believe in the product for 2016 and beyond. >> you saying fact or fiction? >> sound like fiction. >> all right. >> thank you. >> what happened with twitter here, dan? >> here's the thing. >> here's what we thought. twitter had a lot of cash and don't really have the management in place to do this and what about yahoo!'s core to really give them a going after that. i think bob has said the core is worth maybe $4 billion and twitter has a couple billion and they need a bigger platform because they are not growing users and i'm particularly worried, that you know, another quarter of no active user growth and they are going to puke the stock so, i mean, you know, you have to be cognizant of that before the report and they will not be able to demonstrate
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anything meaningful. >> i think it would be crazy for twitter to go after yahoo!. to me that core is something that's proven to be undervalued over and over again. it's a company and management that doesn't manage their core business. i get the creative thinking. for yahoo! it's interesting because on a day when you get the rumor of, you know, silver lake, yahoo! is the company that should be taken apart. so many pieces to yahoo! that have value that you can value some of the parts that could be bought and sold off piece by piece. >> you're long. >> long both stocks, okay. >> but in terms of yahoo! when i hear private equity that gets me excited. when i hear it about twitter, twitter will not realize any real value from a private equity value here. they will stay the course. >> tune into the "fast money" halftime report at 12:00 noon for an exclusive interview with ceo tim armstrong at 12:00 p.m. tomorrow eastern time. coming up, crude oil thinking about 6% today and the commodities dennis gartman says there's more main to come. what he's looking and we'll tell you one dow stock that betters are trading is about to tank right after the break. >> whoa. >> much more "fast money" still
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once you hit bottom at 2615
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on a wti our going to double in 12 months from historical, you know, information, so here you are at, you know, 30 and i think -- i think you'll be 52 by the end of the year. >> that was bp founder and chairman boone pickens calling for not only 52 oil but said oil prices could double by the end of the year. dennis gartman of the gartman letter says not so far saying crude's bear market is far from over. is boone pickens nuts in your view? >> well, one would hesitate to ever call mr. pickens who is one of the great heros of the oil business nuts. >> but? >> i do think in this business he's wrong with all due respect. >> with all due respect. >> but i do think -- i do think that he's wrong in this instance. what we have here is just an overabundance of supply. it's not a demand problem. heard this story before. it's a supply circumstance. you hear talk about the russians
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wanting to reduce supply. they can't possibly because a good three-quarters of where they produce their crude oil from is in very, very cold areas in siberia, and they don't have those pipes insulated. they have to continue to pump crude oil through there. the iranians and the saudis hate one another. they have for lack of a better term a war going on, a gas price war if you want to call it that today from the old days. they are not going to let go, and the african countries innine gla, and the other areas of west africa, nigeria, they are not going to curtail supplies and neither can venezuela, and nor shall we, so this is a very -- it's a supply circumstance. you can see it in the term structure of the futures market on friday when you had a strong rally. the back months led the way up. that's not how bull markets function. that's how bear markets function and i think in this insthans mr. pickens, again, a hero of mine is wrong. i've been wrong before. i shall be wrong again but i've
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been very bearish with crude oil for a lock period of time and i still think new lows are coming. >> this is care. do you think it's possible that the venezuelas of the world, the weaker economies of the world, cannot afford to produce, that magical -- no? we're not near that price. >> karen, they have no choice. they need cash flow. that's all they care about at this point. their cost of production is so abundantly lower than where the market is each right now. >> what is it? >> they would like to have it higher. >> venezuela's is probably $17, $18, 9 saudis somewhere between $1 to $5, who knows where those prices, are but the point being that's not important. what's important is they need cash flow, and when you need cash flow you produce. you don't really care where the end price is. you need the cash flow. that's what's driving it and sooner or later somebody will give up. sooner or later somebody will drop out but that sooner is not now. that sooner is a lot later.
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>> dennis, on the road to new lows for crude do we see stocks continue to move with oil and be highly correlated? you mentioned last week when we were in florida you think the correlation will break at some point. i don't think we're there yet. >> i think the correlation is already broken. in the past several days you've begun to see it break. historically the two have no carlation whatsoever and historically over any protracted period of time the correlation is negative, not positive, and i think that you're starting to see that positive correlation that had existed and become so popular over the course of the past two months or so that's beginning to break. on friday you had -- well, even today, for example, had you crude oil decline and the stock market began to try to hold on and advance late in the day. i think that correlation is ill advised. i think that correlation of people have become comfortable with is breaking down. i think that correlation is done. >> dennis, thank you. dennis gartman of the gartman letter. >> always good to be see. >> guy. >> yes. >> what's your trade here? >> the ovx?
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>> would you rather? >> love this game. i'm going to close my eyes so we can play it the right way. >> boone pickens or dennis gartman on the forecast for oil? >> not going there. >> why, why? >> all right. >> don't yell at me! >> dennis gartman. >> boone is probably going to be right. probably will double by the end of the year, will it double to 52 like boone says or 19 to 38 which is a possibility as well. the oil volatility index suggests and we talk about it all the time they are still paying on the din side. that was diplomatic of me. >> what does this mean for oil equities? >> ultimately he still has to go back to the oil price because we're still trading with the correlation. i still say you can buy great balance sheets and anadarko after the bell numbers were interesting because they were terrible numbers and they will cut cap "x" by 50%. you're in a place where you have one of the better balance sheets that can survive with oil probably at 40. i don't think they can survive at oil at 25. they can get through 2016.
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i agree ultimately this is not necessary lit end of the bear market. a short-term bounce off of this doesn't change but i'm more constructive on oil than many and i think we've gotten to a place where any supply side could turn the market and, again, 5% cut could turn this from 1 million over supplied to 1 million undersupplied if you listen to paul sanke at wolf and that's a big deal and wouldn't take much to turn this oil market around. >> it will be interesting. just a few months ago analysts were expecting earnings to be up this year and now they are expecting them to be down 25% which tells you sentiment is really low and if you do have any change in the cut of supply, a stock like this is going to raly. >> coming up, shares of ge down more than 8% this year, and one trader is making a major bearish bet on the stock. how much further does it have to fall? the details right after the break. just ahead, mattel reporting earnings. what will barbie's new look mean for the stock? that's ahead. you're watching "fast money" on cnbc, first in business worldwide. in less than a second.
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(speaking japanese) i can understand euphemisms, idiosyncrasy and complex metaphors. i know every detail of every public quarterly report in the last 20 years. and i'm just getting warmed up. hello. my name is watson. together we can outthink the limits of what's possible. welcome to the cognitive era. e*trade is all about seizing opportunity. and i'd like to... cut. so i'm gonna take this opportunity to direct. thank you, we'll call you.
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evening, film noir, smoke, atmosphere... bob... you're a young farmhand and e*trade is your cow. milk it. e*trade is all about seizing opportunity. two huge deals got wall street talking this morning are. they on your radar?
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it's hard to find time to keep up on my shows. that's why i switched from u-verse to xfinity. now i can download my dvr recordings and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse. x1 from xfinity will change the way you experience tv. welcome back to "fast money." i'm courtney reagan. the toy-maker mattel has a recent hits try of disappointing street so it's a women departure for bullish investors, the results today propping up the shares after hours. mattel posting its first
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quarterly sales increase in two years after two years of sales declines. barbie sales also increased a half a percent so that's part of the boost. the toy-maker saw its wheels categories surge 17% thanks to "star wars" licensed toys like the jedi star fighter starship and on the call growth was highlighted in emerging international markets. china with sales of 34% in constant currency, also strong growth in russia. sinclair calling out some current headwinds including the loss of the disney princess license to hasbro, softness in monster high toys and recent declines in american girl categories as well as currency pressures that continue. melissa, back for you. >> courtney reagan, thank you. tim, what's your barbie trade? >> well, i'll tell you what. i own a barbie dream house, not easy to set up, by the way. you need a phd. one of the titles of the reports out there, tablets don't replace toys and it's a very important point and a place where technology, branding and trademarks and properties very,
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very important. a turnaround story. new product team. 5.5% dividend yield on this company. i don't see any reason to expect that would be changed. done it through bad times. company is getting better, 38 cents a quarter. stay in the name. >> i think the new barbies are fantastic. >> i would like to see gi joe with a important and maybe bald spots. >> exactly. >> gi guy. >> that's good. >> come on, what happens when you pull the string on gi guy? >> he falls down maybe. >> ponch. it's the economy stupid, that's what savvy traders are saying about ge, the direction the stock is going and how they express themselves? >> today began electric shares, the largest options name in the trade, what options trade would call a put stupid. there was a buyer of 30,000 in the mark 26 and at 28 cents, that's $840,000 in premiums and also at the same time they bought 20,000 of the april 26
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puts paying 41 cents, and that's about $820,000 in premiums, so it's not that the premium is so much. it's -- to me what i find interesting is they bought the same strike in different expirations and both of these expirrations will not catch the sk 1 earnings that will come april 22nd. i suspect it has to do with protection prolonged positions and let's talk about the 26 strike, the one-year charge. 26, this is the area where below that they have protections, about 25.72 to 25.59, and then when you look at that, really, this uptrend that's been in place since the lows in 2009, really it's held the uptrend really well except this one period in august so maybe looking for disaster protection or a long position in ge. >> thanks for that, dan. for more "options action" check out the full show friday at 5:30 on cnbc. >> love that show. >> coming up next, the final call. thanks, dan. here at td ameritr, they work hard.
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wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade. at ally bank, no branches equals great rates. it's a fact. kind of like grandkids equals free tech support. oh, look at you, so great to see you! none of this works. come on in.
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two huge deals got wall street talking this morning. are they on your radar? i've got the ceo that just got a $4 billion check from the energy patch and a message from janet yellen and the rest of the fed. "mad money" is next. and finally canwest fast" but not least. twitter just went nuts over carolina panthers quarterback
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cam newton versace zebra-striped pants. he sported the pants as the team arrived at super bowl 50 and could not understand what all theitivityia was about, because, after all, our traders have a very similar sense of fashion. yeah, there's guys and his favorite pants and grasso with the pink leopard spots he loved and dan's rocking the turquoise black. b.k.'s pants are all hearts. it's all there. in fact, all we want to know is who wore it better? dan or the "fast money" crew? >> we're not wearing pants, we're wearing dresses. >> i'm offended by in a. >> those are beautiful. >> tweet us and let us know. >> i feel object night. >> what's wrong with those pants. >> >> why, gi guy? >> nothing but a ponch and bald spot. tim seymour, final trade? >> netflix at 100 is a sell back down to 90, maybe 58. >> dan? >> exxon reports tomorrow morning. i'm playing for 70 in the next couple of weeks, but i think you buy it with a six handle. >> chairwoman. >> >> much as i love it, goog,
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wait, never call it alphabet. actually wait a little. >> guy? >> take the other side of that steely blue-eyed tim seymour. netflix, i think that's going higher from here. >> i'm >> my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it. "mad money" starts now. >> hey i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm trying to save you some money. my job is not just to entertain you but to educate and teach. call me at 1-800-743-cnbc or tweet me @jimcramer. as january goes so goes the year. february is usually a bad month. down far more often thans


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