tv Fast Money CNBC June 26, 2015 5:00pm-5:31pm EDT
thank you so much for joining us this afternoon. courtney, evan really appreciate it. have a great weekend. that does it for us on "closing bell." "fast money" begins in moments. sarah eisen in for melissa lee. >> we're going to talk to the ebay bull turned bear just lowered the price. that's why ebay went down today. >> great story. straight over to you guys. >> "fast money" starts right now. live from the nasdaq marketsite overlooking new york's times square. i'm sarah eisen in for melissa lee. traders on the desk tim seymour, steve grasso brian kelly, and guy adami. tonight on "fast," china in bear market territory. now morgan stanley saying do not buy the dip. we'll tell you what it could mean for stocks here. plus good things come in small packages. why a few small cap stock picks could mean big gains for your portfolio. the names we're watching in the second half playbook. but first to the tech wreck that was the nasdaq. the index closing down the week. three-day losing streak finish the week. the culprit micron after today's
brutal report. could this be a sign for more pain ahead? there's quite a spillover. >> it's not a positive sign. i don't think you can equate it out to tech in general but for the chips let's talk about them real quick. micron obviously the leading culprit here. traded seven, eighttimes normal volume. about 150 million shares today. down huge. probably the biggest one we've seen in micron in quite some time. how do we trade it? i know it's cheap enough on valuation. all the analysts lowering their numbers. everybody's piling on. but given the amount of volume it traded, given the sell-off leading into this move i think just for a trade you're buying micron against 19 bucks on the down side. this is the levels we broke out from basically in the spring of last year. i think it's pretty interesting just for a trade. qualcomm on the other hand can't get out of its own way for whatever reason. i think there's some disturbing things going on there. i don't think it's a falling knife but i think the knife had been falling. today is the day it hit the floor. >> i think it's a place where mike ron is in a specific place where their industry and the
companies around these guys the competition seems to be dumping out more supply demand. we know about the pc demand and we've heard about this till we're blue in the face. when i look at micron i think there's a lot of pressure here. and therefore maybe it's overdone but to think it's going fwouns here i think you're in dead money. i've been wrong the last two bucks or 8% on the stock is i don't think you can paint them all with this brush especially when you've priced in a lot of pc weakness already. >> is this why intel went out and bought altera? we knew about the pc weakness. >> but when you look at micron everybody thought it was about dram. when you hear from the company the dram is okay. if you look at a chart the company doesn't look okay to me. further weakness. they're naming a bunch of other things they're concerned about. if i told you that a couple months ago kb homes would be up 20% and micron would be down 20% in the time frame you would have thought i was crazy. but that's what you're starting to see. a switch in where guys are long.
>> one positive sign i thought was actually in microsoft today because obviously we all talk about this pc demand weakness. microsoft is the epicenter of that potentially. they also have their data center that they're working on now. but the point is it held 45 and that's a very big level. i was actually positively surprised by microsoft's -- it's called relative outperformance in today's market. given the fact that intel got crushed, micron. if you go with guy and say i want to buy this micron rebound, i think you've got more juice in microsoft. >> it wasn't just micron guy. it spilled over to hewlett-packard, adobe -- >> qualcomm. i mean also other parts of the chip space. sorry, go ahead. >> no, listen tim makes a good point about the falling knife thing. i get it. but this was a $36 stock at the end of last year that's been steadily declining ever since. my point is that knife has been falling for the last six months. i think it culminated crescendoed today. can it go low grer here? absolutely can. but against 19 bucks, again, the level we sort of broke out from
in the spring of 2014 given all the volume that traded today, given 9 fact that every analyst is late to the party, downgrading the stock, i think for a trade against 19 the risk-reward is pretty good. >> here's a question. these stocks were so hot because of aw the deal speculation and the m&a activity. some of the biggest deals of the year have happened in these kind of stocks. is that done? >> i think some of the guys -- the names we're talking about i think the deals are probably done. but i'd like to talk about qualcomm for a second because i think there's actually a recovery in the china smartphone pc -- excuse me pc -- china smartphone line. and ultimately what we're getting is qualcomm was under a lot of pressure for the regulatory environment. they're under a lot of pressure for royalty reasons. and if you look at qualcomm and also talk about the buyback there this is a company that's probably got the largest buyback per market share in the entire space and i think that's a major support for it and yet it continues to look lower. >> if we have to look at this through a prism of rates maybe we're starting to see a repricing of everything, of all the different sectors. guys that aren't willing to pay for that growth or that
perceived growth, especially in the face of a bunch of headwinds, and that's you why see the only sector that i feel comfortable being long right now and i stated it in the beginning of the show phm. kb homes. bankamerica i'm a little on the fence here. i'm looking for the catch-up trade in the financials. looking forward to rates rising. but i think tech is going to be challenged. especially when you look at tech growth companies. >> and we did see the 30-year yield hit the highest level today since back in october i think of last year. let's get to the other troubling sign. rates is one. certainly chips is another. china, morgan stanley making a big call on china saying in a note this morning that you probably shouldn't buy the dip. shares of the shanghai composite down more than 12% this week alone. is morgan stanley right? and what does it mean for the stocks here? tim, let's start with you. these moves are brutal. >> they're brutal. and certainly the chinese adr names are getting brought down with them. if you look at the space, baidus alibabas weibo, all these guys are down big. but china down 18% over the last 11 sessions.
bear market territory. what's happening there's a lot of things going on on the regulatory side that have people concerned, pressure on banks to pull in margin. we've hay all tore a triple r cut the last three weekends, we have hadn't it. 28 ipos that were announced yesterday. a lot of reasons why this market is under a lot of pressure and then of course by the way trading at a 90 rsi relative strength indicator indicating it was overbought. where are we now? i think you're in a case where we talked about falling knives i don't know you need to buy this falling knife but if i look at chinese valuations at this point the local market's trading at 10.2 times but don't go after that if you don't want to. go after the names that have been brought down with it. and actually the fxi, the hong kong traded names are names that have been over. i like china mobile i'm long alibaba, i'm long baidu. this is not the same story as buying a liquidity bubble that's in the local share market. these are real companies, some of the best growth out there. >> the r market at least the broader market does hold up in the face of 7% lower for the chinese equity. >> yeah certainly. a lot of people at least that i falk to and it's my view too is
that the chinese market is probably one of the more manipulated markets out there. it's a rigged type of market. so why do i want to be invested in it? going up 20% really doesn't matter. falling 7% shouldn't really matter. you need to look broader. whether or not the chinese economy is actually stalling or stagnating. that would concern me more than actually this. this fall. that being said i think there are some opportunities out there in chinese, chinese adrs that trade here just getting a drop down with the baby with the bathwater type of thing. to me it's trainor solar, a name i'm long. you also have a catalyst next week. if the xm bank is not approved or not extended this actually could be fairly positive for trina solar because they'll be more competitive vis-a-vis the solar companies here in the u.s. i think you use the weakness today to buyback. >> the fxi was banging against 344 for 44 for a long time into march thn a huge spike to 52. since then you've had a series of lower highs, lower lows. tim mentioned the fxi. it feels to me now given the way
it's just trading technically that it wants to push down and test that 44 level. a level that was resistance all into the spring. resistance should come support. i think you buy it at 44. >> got it. coming up, small caps big profits. the small cap names that could log serious profits heading into the second half of the year. plus one former ebay bull downgrading the stock to hold saying there are zero catalysts left to push shares higher. could this be lights out for the online retailer? maybe just the top. we'll hear from the analyst who made that call. and later, apple music launching next week, but is the street underestimating how big of a launch this could be for the stock? which has been pretty much stuck in neutral over the past few months. all that and more just ahead on "fast." hey, can i help you? yeah, we're interested in the iphone. we promised one to beth for her birthday. you know mobile share value plans now include rollover data, so the data you don't use this month rolls over to the next month. wow, even better. so what are you gonna do with your old phone? i'm giving it to my sister emily. she gets all my old hand-me-downs. oh i'm into bedazzling too.
welcome back to "fast money." if you're looking for a way to wait out the headlines from greece, small cap stocks may be the answer. cnbc's dom chu has all the details for us back at headquarters. hey, dom. >> all right. so sara, if you're looking for that hot spot in the market it is the small cap stocks right now. the dow, the s&p, they're just off their record highs, but they're up between maybe a half a percent and 2% year to date. meanwhile, you've got the
russell 2k small cap index, up 6% so far this year. that means it's gained over 20% since its lows back in october of last year. that's solidly bull market territory. now, among the stocks that we looked at worth at least a billion bucks that have really helped power the gains, if you will, names like herron therapeutics retrofin, horizon pharma, the case for the smaller and mid-cap stocks has to do with global exposure to the markets. they don't have much relative to their larger cap cousins. so if things go wrong abroad maybe like in greece perhaps it spreads to europe maybe asia they're relatively insulated. they don't have as much of that relative exposure toward foreign profits as well. the bearish case involves what happens when the u.s. economy takes a turn for the worse. they're more levered to that. if you take a look at what the effects overall could be, take a look at what happened when the fed raises interest rates, what does that have an effect on smaller companies borrowing costs. that's just a few of the things to consider. but still right now the small
cap stocks solidly sara, outpacing what's happening with the rest of the overall market. maybe with the exception of the nasdaq. >> they've been popular all year with the strength in the u.s. dollar. thank you, dom. let's trade these small cap breakouts. grasso. risk is high rates as you said. >> yeah. i see the risk as high rates. but if you look at the iwm and the outperformance that dominic speaks to up 7% year to date against the backdrop of the s&p up 2% you would think that if the dixie reverses and the dollar weakness you would think that that gap should shrink. right? you would think that the gap should shrink. but it's not. so it seems like iwm is a win-win at this point. i don't see that gap shrinking at this point. >> i'll go to the other side. i actually think it's a lose lose. if rates go up small caps go down. if rates don't go up, it means the economy's taken a turn for the worse, small caps go down. >> against the backdrop of buying s&p versus -- >> all relative to the s&p. a reversion of the mean small cap stocks should not be outperforming this much. also on valuation i think
they're -- you're right. i've been wrong the last few weeks because i think small cap stocks have been the place to go if you've been worried about the world and actually i think you have a lot more compressed kind of volatility in small cap stocks to play with and get cheap volatility if you think things are going on. not even being directional but hedge your portfolio with the i bhchlt. that to me has been the call. >> guy, we're talking about the risks in greece, talking about the risks in china and yet we haven't discussed that the u.s. posted some pretty solid economic data this week especially on consumer spending which is most important. >> we'll talk about bonds in a little while. just to tidy up the iwm conversation i hear tim, hear what b.k. is saying valuations are, headwinds are there. but you have to risk 5 perts on the down side on the iwm. 121ish. that's been the line in the sand, 121 that's what i think you trade against on the long side. >> big day for finish line kick off our top trades tonight the sports apparel retailer reporting better than expected earnings detailing sales trn to
rise this on the back of nike's blowout report last night. the stock also hitting an all-time high in today's trading session. basically carrying the dow positive. sqult best of two worlds for finish line because their numbers are very good. they're also getting pulled up by nike's numbers. and the whole call that the athletic apparel world, especially the online and the direct to consumers is doing very, very well. but for these guys specifically it's an operational efficiency story, they're doing better there's a big buyback announced today. i don't think you need to jump in and chase this one even though i remain bullish on nike after nike's move. finish line has a lot to prove but their entire space is alive and well. the athletic apparel play or part of the retailing sector is very, very active and it continues to stay well bid. >> the question is grasso do you buy them both or is nike's valuation too high at this point and you play it by going to a finish line or a foot locker? >> or can i go to an under armour? under armour seems to be the best in breed. so people look for growth. when you're looking for growth in that space they clearly go to
under armour. and to guy's point to mirror that with this space there's a reason why things outperform. investors are still investing in under armour as the growth play. >> by the way don't miss finish line ceo glenn lyon on "mad money" tonight with jim cramer. 6:00 p.m. eastern time. next up a big move in bonds. the ten-year yield hitting a two-week high. 2.48%. the move stemming from renewed hopes over resolution for greece. i don't know where that came from. the move was higher yield. >> look the bond market has not traded well now effectively since -- let's call it march when the fed started jawboning about the dollar. timmy's had this one right now for a few months. what was resistance becomes support in terms of yield, that's 2 1/4 in the 10-year. we sort of push down to that a week or so ago, bounced right off it. now 2 1/2% seems to be the line in the sand. 115 in the tlt is a level we sort of broke out from back in november. it's got to hold there. traded through there today,
closed above 115. tlt is your line in the sand. >> should you be lessening your exposure if you have bonds in your portfolio? >> no, i don't think you necessarily have to lessen your exposure particularly after the move they've already made. that would be basically selling out -- or near the bottom here. if you're allocated into it that's fine. stay in it. maybe on some kind of rip higher you get out of some of that. the only thing i would say just to extrapolate a little more look what happened in the financials today. we had higher yields but the financials couldn't get out of their own way. they're at a very key technical point. one way or the other these things are going to break and if they can't break out on higher rates i think they're in a little bit of trouble. so i would start to lighten up on the financials. >> they have been heavily bought in the last few weeks. >> now toechlt bai, the stock falling after bgc cut the name to hold from buy. colin gillis, the man behind the downgrade of the day. welcome back to the show. >> great to be here. happy friday. >> happy friday to you. you think the good news of the split is already priced into the stock. >> it's been on a good run, up
23% over the last 52 weeks. the big news is that the split is coming. we've got the date. it was always a soft target for q3. now it's going to be july 17th. right? so you'll have two entities. this is a company that's worth $74 billion. right? and it's trading around that 60 $61 range. if you value paypal and the marketplace, 50-50, right? you'll have two stocks trading around $30 each. i think paypal will be the more coveted asset. you'll likely see that trade up a little bit. and everyone who owns ebay now for the paypal bit will become a seller. and that may depress the marketplace. >> you think the money's going to come out of ebay come mid july and into the new paypal? >> correct. right. so looking into 2016 you may have an attractive opportunity in that marketplace business if it becomes a beaten up asset. and conversely there's so much interest in paypal that may become a more volatile stock and may be priced relatively
aggressively. >> colin i'm curious on the paypal side, that's what everybody likes, they're supposed to have tremendous growth, but there's also a heck of a lot of competition in that mobile payment space. >> absolutely. >> so can they sustain the growth that they're trying to have? >> this is what i'm saying. if you look out into 2016 it's going to be much easier for the marketplace business which has great cash flow characteristics to accelerate its growth because it's been so lackluster. right? paypal's had great historical performance. it's going to be hard for it to accelerate even more. there's a chance we could decelerate. so let's see how the value of the split happens. but you may find marketplace more attractive in 2016 than paypal. >> all right. no upcoming callus for ebay. colin, ouch. great of you to join us today on this friday evening. colin gillis senior technology analyst at bgc financial.
let's trade it guy. >> well, real quick, what colin didn't say is his price target is still at 65 bucks which is still about 8% higher from where we currently are, and i think it gets there absolutely. $60 was resistance for the longest time. got through there. you stay on the long side in ebay against 60 bucks. i think it gets to that crazy overcaffeinated jut knob on the hook. 65 bucks. >> always like having colin on. all right. here's what's coming up on "fast money." >> sour apple. after a rough performance so far this month, could next week's apple music launch send the stock back to the top of the charts? and later in the hour it's the secret sign that the rise in rates is over, and we'll tell you how you can profit. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet?
69,000 shares of trading volume. it will replace integrus energy which is going to be bought out by wisconsin energy. that merger taking one company out of the s&p 500. s&p, dow jones indices will replace that company effective close of business june 30th with j.b. hunt transport services, a trucking and logistics company. back over to you guys.
>> thank you very much dom chu. apple just days away from launching its new digital streaming service simply called apple music. so are investors underestimating just how big this product may be for the stock, for earnings? time to take your position ahead of the event. let's start with you, grasso. >> we've underestimated apple watch. i should say analysts have underestimated apple watch and the impact it could have to apple's bottom line. i think they're underestimating as you just said their streaming business. and what i think that people really have to factor in is we're led around by these huge money managers. and if you look at icahn, out of netflix, but equally as positive on apple. he's still in apple, believes in apple. and i do as well. and i think that you're going to see this thing leg up from here. it's already up 15% year to date. so it hasn't exactly underperformed. >> but it's sort of in this weird -- >> yeah, of course. it's up 15%, though. i'll take that. >> i think they've totally underlevered the whole itunes experience. i think this is a massive place for these guys to grow. like steve i also think that the street has missed a lot of these kind of services part of the apple line. and when you get to a company
that's trading 13 1/2 times x cash you have a lot of opportunity here. i78 long the name. i don't think this is a game changer but i think it's not in the stock price. >> and hey, we did learn that taylor swift is putting "1989" -- >> t-swizzle. right. >> on the new service. that should help. >> that's reason alone, guy. you've been talking -- >> i love t-swizzle. i love taylor swift. they're all great. >> but it's not your genre. >> no. >> it is time for the final trade. let's go around the horn. tim. >> again, we talked about this earlier. china's been a place where other things have been sold off in sympathy. baidu 30% growth ate 30 multiple as good as you're going to get. >> grasso. >> we talked about rates rising taurkd about banks a little bit. i'm long bankamerica. i continue to be long bankamerica. i'm looking for the catch-up trade because the goldmans and the jpmorgans, they're already up year to date. bankamerica is not. it's down about 2%. and i think you add end of month, you add rebalancing. you've got a lot of pressure put on the financials because they
perform so well over the last couple weeks and months. i think on monday we get back to that. >> b.k. >> so on monday morning we should have a much better idea of whether we have some kind of deal in greece whether or not they're going to break off. for me the biggest risk out there, the one with the biggest exposure to the whole euro zone is deutschebank. big derivative exposure to the euro zone. it's actually traded up a 3wi9. on monday morning if we do not have a greece deal deutschebank is the name you that sell and/or short. >> guy? >> it's been a great two weeks. great job by you. thanks. simon was here. right? we had -- who else? >> mandy. >> mandy was here. it was great. mel's back on monday. karen's back. what are you doing tonight? you're going to the cincinnati reds game right? >> playing the mets. >> because you're from cincinnati. zbliel be the. >> i'll be 9 only one -- >> exas. i think it goes higher from here. thanks for playing our home game sara. >> thanks for having me as always. for more "fast money" you can watch it at 5:00 p.m. monday
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i am coming to you live from the nasdaq markets site. the guys are getting ready behind me. while they're doing that here is what is coming up. >> what is that? >> antidote. >> to what? >> the poison you just drank. >> investors were shocked by the drop in chinese stocks. we'll tell you which dow stock could be most vulnerable to the shanghai swoon. plus -- ♪ ♪ we're gonna bring you the power ♪ because there is one sector that is setting up for an electrifying trade, we'll shine a light on it and tell you how to profit. and -- which large cap tech stock is set for a big surge? >> please tell me. >> we will jack, and we'll tell you how to make money too. the action starts now. ♪