tv Fast Money CNBC September 22, 2021 5:00pm-6:00pm EDT
>> going forward on the dollar which had a strong inter-day move, dollar did gain and getting close to breakout levels >> exactly back up to the top end of the range year-to-date the market leaning toward the fed being slightly hawkish >> and rallied nonetheless so the tapering decision and announcement that does it for us. "fast money" begins right now. >> live in the nasdaq market square, this is "fast money. guy, karen, tim and steve. fedex leaves investors with more questions than answers, but have no fear. breaking down each of these stories.
and congress making an all clear for the cannabis trade >> how traders are positioned. we start off with the taper. j. powell telling the market to get ready because the fed is about to cut back on its bond buying binge none of that rattling the market the stocks popping let's get right to it. steve liesman has more >> the federal reserve suggesting it's on the edge of reducing its asset producing moderation may soon be warranted. it appears as if the fed is headed for announcing it will reduce the 120 billion in monthly asset reductions in november and start it in
december >> generally it is viewed that so long as the market is on track, a gradually tapering market that concludes around the middle of next year is likely to be appropriate >> so lowered growth due to the effects of the recent outbreak of covid and found the committee split on when the first rate hike will come some are forecasting a hike next year and some forecast no hike he said the reason news reports and financial disclosures shows the feds code of conduct has to change >> it is now clearly seen as not adequate to the task of really sustaining the public's trust in us we need to make changes and we are going to do that as a consequence of this. this will be a thorough going and comprehensive review
we are going to gather all of the facts and look at ways to further tighten our roles and standards. >> powell did not say how long it may take for the feds to make those changes, but he agreed with what we had reported on cnbc, fed officials owning the same assets the fed was buying they shouldn't be doing that >> he himself owning muni bonds, which you pointed out in your story, he said that was not right. i thought that was interesting as well. the direction of the fed, within the broader framework of the fed being overly dovish, it seems there is a hawkish move in terms of expectations. no >> you could say that. i wouldn't disagree with you, melissa. it's very slight though. i will be interested what the traders think about this
if there is one in stead of no rate hikes in 2022, i don't think seymour would throw up his hands and scream start running for the hills. i don't think that's the way they would work. maybe guy would, but i'm not sure the point being it is a quarter point rate hike. if there was a reason to get nervous it would be the following scenario, the fed is tapering too late and then it gets to the beginning of ynext year and still on the 4 or 5% of that cpi and has to pull up rate hikes further. if we are going to be where the forecast is now, i would not consider that a major reason of concern. >> that's what jamie dimon hinted at in an interview
overnight. bingo, because i think that's where guy would fall >> i can't run anymore so clearly i am not going for the hills. there is no question that in terms of our world, steve, they have done everything since october of 2018, they have done everything extraordinarily well, telling the market what it wants to and needs to hear my concern all along has been there could potentially be a misstep. these are my swords. -- words this corner they are painting themselves into gets smaller and smaller and i see less of an exit strategy available. that remains my concern. that said, good for them >> do you know how a guy can pitch an almost perfect game, give up one hit, lose the game and nobody remembers the game, it wasn't a great game
if the fed ends up getting out of this, reducing qe, getting to zero and gradually returning rates without a major outbreak in inflation, then you are right, it did everything right but if it ends up with an inflation problem, maybe it got more than one hit. maybe it was a bad inning and not the outing we thought it was. >> even i, who have no knowledge of sports, can understand that analogy. steve, thank you always great to see you. steve grasso, what are your thoughts >> there are people that -- and guy is one of them -- that feel that the fed has waited too long to taper as it is. there are people in that camp already for the running for the hills. but i guess the bigger question would be, what happens if they
start tapering and made the distinction between raising rates and tapering what happens if they start tapering and rates don't go higher that would be my question for steve, but it's rhetorical now what would the market do for that i would suggest that the market would sell off because then there is no one at the switch. and all things are out of the feds control and maybe they are already, but maybe now market participants have to realize that the fed or no one has control over inflation >> so you are basically saying that you are afraid that the fed is going to taper and the feds won't respond whatsoever tim seymour? go ahead, finish >> what i am afraid of is the knee-jerk reaction that rates
spike higher off the taper or gradually move higher and then they just hit a wall at 1.6. that would be my biggest fear. >> tim >> let's stay with the sports metaphor and using baseball. the better metaphor is leaving the pitcher out there one batter too long the guy pitches a great game but it's time to take him out. it has been two or three meetings where the feds should have taken a lot of this tapering conversation off the board. we are going to talk about fedex, but when you talk about labor intensive industries, there is nothing transitory about what is going on this is something the fed is
unable to control. record job openings, you've got a dynamic where when you here about fedex having these major labor shortages in certain hubs and what it's doing to its overall business, it takes you back to front and center, going from seven fed presidents to nine who think the first hike is in 2022, the delta on that, i think to me is significant not one rate hike, but a fed feeling urgency to move faster it will be relative to a point they will have to move faster than the market has heard them talk about it before that's what has me concerned i think the median term for the fed is still very unclear as it relates to expectations. look at the dollar today that's what has me concerned for markets and risk assets. if you think about a fed and
where we were pre-covid, premassive accommodation, you have $1.98 or so, and i think that will be efficient for multiple classes our fed may be moving faster than others. >> karen, how do you interpret this if we should be concerned about a fed that must increase rates at a faster pace than any of us increase but there is a lot of runway between now and then, what do you do we saw the markets go higher today? >> i am not sure i was thinking the knee-jerk reaction would be down i thought of this scenario as the market has the fed hostage or the other way around, like in a bank, if no one makes any sudden moves, we will get out of here alive i feel like jay powell is like
telegraph, telegraph, telegraph. whatever it is, as long as you don't surprise the market and give them ample time, they will react okay i was surprised with the mid tapering i don't know the answer. the cadence of the tapering, is that lineal if they begin in december and six months later? that's sort of of interest to me i think they were right to pause a little the delta variant ended up being more dramatic than we thought and we saw a little bit of a slowdown they have been doing the right thing so far i don't know that 22 or 23 for a rate makes any difference right now. we are pretty short-term focused market whether it's the end of '22 or '23, i don't think it matters. >> if i told you in advance what
the scenario was and headlines that could be market drivers, guess what direction the market would take, would you have guessed this direction the market took today? >> no. i am brutally honest given what we have heard over the last couple weeks given the head winds. that announcement out of federal express. i would have thought you add those things up, we would have a significantly lower day. we have done this before, but for the new audience, taper does not mean they are selling things it just means they are going slower the fed balance sheet will continue to grow albeit at a slower pace. we talk about it rightly so, but keep in mind they are growing this balance sheet and buying less things. it's just that things have slowed down a bit. to answer your question, i
thought would be lower for sure. >> tim, what sectors would you want to be in given what the fed told us today? >> i think if we have some inflation and we are concerned about inflation, we want to be in reflags ri sectors where we have late sector cyclicality which in some cases are suffering from labor pressures, and supply chain disruptions, frankly, that i think are more temporary. i like industrials and banks relative to where we are, and where we were earlier in the week, the vix that hit the 5% down level today not surprising
if the fed was concerned -- and right now they haven't changed gears at all the parts of the market i think you have to like are the ones most sensitive to higher inflation. just worry about the dollar, some other things that may count act that move. >> coming up we will tell you the big headline that took $40 billion off the market cap today but first, fedex is accelerating after the fallout. hey lily, i need a new wireless plan for my business, but all my employees need something different.
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welcome back to "fast money. fedex shares dropping hard after yesterday. the company said labor shortages and slow delivery and rising costs. karen, you said you were going to go back and listen to the call >> i like to listen to the call as opposed to reading it because you get to hear the voices and emotion. last night the analysts were frustrated and disappointed. they kept coming back to the labor shortage and how much it actually cost them
the company was fairly forthcoming, about $250 million in shortage of labor i think it was 35% fewer capacity or less -- or fewer employees if that led to inefficiencies, so they had to reroute packages to other places that was the big myth. analysts were like we see you spending tons of money if you are roic, return on invested capital, above your weighted cost of invested capital. if it isn't, you are losing value. the company insisted they are creating value the street was concerned that you only got it down about by the amount of missed and you say
problems will persist. what do we think about the rest of the year with this first quarter loss they said we are working on efficiencies, optimistic about the rest of the year, but that this labor problem will persist. what will the analysts say we saw a lot of going down today. to analysts, their price targets are well above where the stock is trading the company during the quarter bought -- i think they spent $500 million on stock and paid about 287 per share. that may give you a sense of what they think their stock is worth. i didn't buy it for a few reasons. one, i'm frustrated. they will continue to get penalized for the same thing
i know carol is coming on toppling -- tomorrow and is doing an interview on closing bell. if she has a problem, it will close down if people think why doe-- if up doesn't have the a problem, why does fedex maybe it will trade better, but it will be another quarter we have seen them miss and then make it's frustrating all in, what did i do? nothing. just be sad. >> that's terrible in and of itself but there are plenty of other share shareholders shad end by this event. if these persist, we are hitting the holiday season, we havesee
with the delivery companies, making sure they are staffed up and ready to roll, and if we still have the shortages and let's say the portland, oregon hub that remains at 65% staffing, what happens then? their prime money making quarter is threatened. >> the ground margin reflected below the quarter. karen referenced the relative analysis fedex/ups fedex earnings fell 14%. on ground revenues were up 9% and earnings fell 20% year over year so the consolidated margin difference between ups and fedex is the difference in the multiples of these companies and probably deserved because it
seems like this was a lot to fix. on the consolidated margin, if you put the same margin on fedex as ups which is about 13.5%, the eps on fedex which was downgraded to 20 bucks a share at mid point, it goes to 35 bucks a share. this is a company nowhere near as profitable as ups despite the fact you have the tail wind of pricing. there are other dynamics, and international air freight price pg and they announced the increase two days earlier which was a decade high. they are getting these prices which are a major story. right now you are looking at 11 or 12 times at best for fedex.
if you could get it to 13 or 14. >> grasso, is fedex a no touch >> no. everything i heard from karen, it seems like a tran siory event. the stock is oversold. i wouldn't go out and buy it tomorrow, but if it holds at 229, in the next couple days i would rather be a buyer. they hired more seasonal workers. i think they can make it through here i think the billboard will flush itself wait a couple days and try to buy on a discount. >> guy, same question? >> i power pitched it at 225
the analysts lowered the price but those were from 285 to 360 on the high end. a lot of people believe in it for a number of reasons, not the least of its valuation but the problems are similar to the self-inflicted things that happened in 2018 and 2019. >> we are just getting started on "fast money." >> facebook under pressure the social media giant falling after underreporting ad performance. the traders dig into the details. plus, we are looking under the hood as crypto wallets come to the robin head space. that and more, when we return. first carbon-neutral airline on a global basis. we believe you shouldn't have to choose between seeing the world,
welcome back to "fast money. big news out of facebook after the close. julia? >> facebook ceo announced he would be stepping down from the roll next year he will be replaced by a long time facebook executive who created the newsfeed years ago and the facebook reality lab it soversees facebook on the metaverse. this comes on the news today they said they expect to have a bigger impact in the third quarter than the second quarter, noting that they have underreported web conversions,
people who act after seeing an ad they have underreported it by 15%. they say -- the business outcome may have increased and makes it harder to measure the campaign on the platform. this could make them think that they need to spend more. facebook says it is working to find new ways to improve its ad measurement, to -- analysts tell us it is possible the market is overreacting the stock dropped on this news they said this is because it's directed at advertisers. we will see what happens next quarter. >> in the last earnings call facebook already said they would see a greater impact from this change in the third quarter than
second quarter is it the level of detail scaring investors at this point? we've heard this before. >> we have heard this before it's unusual for them to reiterate this kind of warning as we near the end of the quarter. i think it's that iteration and specificity. if we were off by 15% -- lack of accuracy is not good you want to know who you are targeting and the impact of the ads. that's crucial for the advertisers as well as facebook. >> julia, thank you. karen, how did you interpret this >> on the headline it looks negative, but i didn't think it necessarily was. snap was up and google was up. they are talking about is it going to become more expensive for advertisers. one of the beneficiaries of that would likely be facebook
did we see the ad load get higher i don't know to me i think it was an overreaction it is not all negative necessarily. we have seen facebook warning on things many times. we saw it last quarter although i think it was just implemented the beginning of the quarter so i think it may have taken time to get a real handle on it i think we have seen them talk about expenses being higher, things like that and yet again and again and again, ultimately there is not that many places to go facebook valuation, when i look at it, if you back out the cash, it's trading at 20 times earnings that's not expensive in this market and not expensive for a company like facebook. we have seen these threats many times. maybe it will be one but so far it hasn't been.
i'm long facebook, staying with facebook, interested to see what the next quarter brings, but i think this was an overreaction >> there has always been a floor to the stock, guy, because it's seen as the only game in town for advertisers to get the reach they are looking for at some point that refrain may not work >> we have learned that -- time passes by quickly, but we learned that during that two-week period of time where advertisers left that didn't seem to hurt the stock for more than a week or so quite frankly we learned that advertisers have nowhere to go, number one, and number two, people don't leave the platform. karen mentioned risk the one i was concerned about is if it falls under the purview of
esp investing. everybody wants to be liked. apparently facebook put things in place to be liked where they talked about highlighting the good news stories about facebook and tamping down the bad ones. there are so many things to be nauseated by this company. but the business model and where people go is not one of them and wallet makes a big move. and congress takes a big step towards legalization is the cannabis trade finally turning a corner we'd be closer to the twins. change in plans. okay. mom, are you painting again? you could sell these. lemme guess, change in plans? at fidelity, a change in plans is always part of the plan. that building you're trying to sell,
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it has been a bone of contention i sat down with robin hood's chief officer and she said they need the right safeguards in place before they can debut this and they are not rolling this out right away they are rolling it out for a select group and then getting feedback it is increasingly important for the company's top line in the recent quarter, crypto accounted for more than half of transaction-based revenue. that was up from 17% and just 3% last year. >> for some of the early movers like coin base and gemini. up more than 10% on that news.
>> kate, forget my ignorance on this, but how did robin hood users before, had they were trading crypto, did they have to move it off the platform to separate custody >> they didn't hold the keys there was this slogan online, if it is not your key, it is not your crypto. they didn't hold it themselves they had exposure to the prices and didn't hold the keys to your own wallet, which if you want the ownership to transfer it off, hold it in cold storage which is a way to hold it on a hard drive, but other people who say they don't want the keys, the responsibility it may have been a vocal minority calling for this, but it was getting traction and it seems they are catching up with
coin base. they have had the ability to hold their own crypto since the get-go >> let's bring in can dan to covers both companies. you say robin hood is the clear winner >> robinhood is in better position the thing people don't understand is the engagement on the app is greater than any other app we have seen some people use it multiple times a day, some use it multiple times an hour it is a super app. they give it away for free and i think that's why robinhood is in a better position long-term to be one of the next banks versus coinbase which is still charging for a service you should eventually get for free. >> what happens if order flow is banned or changed. if free is the differentiator
and that goes away, how does it stand out? >> people using robinhood like using it the engagement is not just because it's free, but because they figured something out how to approach their customer base. if it is banned completely, they will have to change the way they are doing business this is a bit of an aggressive assumption that it would be banned completely. we don't know how it will end up that's a good point. >> dan, would you agree that robin hood was forced basically into having to do this, and i do agree that its coin base is lost, whether incremental or more than that, and robinhood's gain when i look at crypto, down the pike is looks like more
compliance, more taxation. does anybody benefit from this two years out or does anybody suffer >> great question. let's bring the square, and papal into the universe. the key is diversecation the more diversified you are, the better you are if you take coinbase they would live or suffer depending where crypto is. if you think about robinhood you have equities and the banking side which is about the future same thing for square or papal that is key here, the diversecation and ability to survive if one areas of market does better or worse at any given time >> why do you think coinbase was up on this, dan? >> i think it might have been the reaction of -- the key
future if you are bullish on coinbase, you are bullish on the crypto economy becoming a real thing and the ability to play with crypto or bitcoin. seeing others do the same thing, it may be signaling to the market, hey, bitcoin and crypto are here to stay and we will be able to use it as a means of payment. people will have to keep it under wallet it may be reassurance of the resiliency of crypto >> dan, great to see you thanks karen, what did you make of the story on the two stocks? >> i'm thinking that it did have a negative impact on coinbait wh base /* which would have been u more in this market.
one thing he brought up that i thought was interesting, he feels that robinhood will win. what is the average account size of crypto for a robinhood customer versus coinbase i'm guessing that the coinbase is much bigger but it seems like the robinhood is more active that's interesting and how they are going to make money. he is sort of convincing me. >> coming up, what just happened on capitol hill that sent cannabis blazing higher. and piling out of peloton today. that and much more when we return charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people
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>> you could be pushing safe banking through a bill nobody expected my friend used the term spark in the dark this was a headline the industry didn't expect. this is the fifth time the house has voted through safe banking, not a big deal the fact this moved onto the senate doesn't compete with the schumer bill that was so comprehensive to pass and dead on arrival i think this is a bipartisan issue. this is a piece of legislation that will move quickly, that you can actually see safe banking towards the end of the year. it doesn't open exchanges or institutions into cannabis, but it gets it on a federal level in terms of banking it gets it in a sector at a bottom time where the sector has been strong. what this shows is there is a
strong constituency and bipartisan support for safe banking which doesn't deschedule if you listen to some of the companies that is have come to market and been able to list on nasdaq, lending as a service might be allowable in a safe banking environment, bringing more lenders and capital you ask about movements, people following cannabis know despite strong profitability, sector is down 40% i think at 12 times it, all you need is a spark. three-day move has been 15%. oversold conditions. as i said last week, it shows how spring loaded this sector is because the fundamentals are strong >> on peloton, dropped more than
6% after there was a report about a slight stepdown in demand karen, you flagged this earlier today. >> i am not familiar with yipit. clearly a lot of people are. just the hint of a slowdown is enough to take -- 7% off the stock where it's already down a fair amount in the last couple of months. i don't own it, and i love the product, use it all of the time, but to me these super high flyers are a bit scary in a slowdown and if rates move, i think we will see how these high flier pes come in. >> guy, would you agree? >> yeah. we talked about this on september 9th if memory serves, which it typically does.
i have a bit of an elephant in me we talked about it on the show that night, hmm, that seems to be outside their level i think it may come down to 84 and in the spring take another look at it stock running higher, but option traders are betting on a breakdown coming when we return following the "fast money" podcast.
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welcome back a sneak peek at the cramer cam catch it all at the top of the hour on "mad money." despite today's options, some saying just sell it mike >> we did see about 1.3 times average daily call volume. the options market is implying a move 5.6% higher or lower. the most active options were the
october 1 weekly 160 strike calls. well over 2,000 of those traded at $3.70 but what we were mostly seeing were institutional sales so sellers are betting it will not rise above that price. if they are long in the stock they are willing to sell it at 4% that would suggest they are not willing to after the last quarter. >> steve >> nike bounced off that 100 day moving average which is around 152.30 then it always enters the conversation when you talk about nike nike broke its 200 day moving average. last day it broke that 200 day moving average, under armour, it
rallied 40%. i am not saying it will, but it looks like it will bounce from here i would not be a buyer of nike i would be a buyer of underarmour. >> i will let that go. china and delta, that would be my concern for this quarter. >> we have had that conversation around nike in the last few weeks as we heard some of these concerns expressed especially by peters ultimately, nike, their path to glory has been innovation. they have pricing power not only because of their d.c. presence but where they have been able to push the supply chain to their advantage. they are one of the few that can. i don't love the setup into these earnings year over year the bar is difficult. but i am long on the stock and not going anywhere
>> guy, what do you think of the setup going in >> the stock is off about 10% from the 174-ish level i think that was an all time high that move back in late may/june when it traded up to 152 in a straight line and then traded subsequently higher. so here we are i think the setup is okay. a lot of analysts have taken down their numbers in terms of estimates and stuff. vietnam is out there, but all of these things are known anything on the margins are surprises to the upside and i think this stock is backin the 160. i think it sets up okay. >> karen, valuation, too high? >> yeah, it's too high it's a great company i would never short it i think they did telegraph the issues with vietnam. many companies have, rh did it
so they were setting it up for us recently said is christmas going to be ruined every day that goes by and the congestion doesn't seem to get better and inventory, getting product, either it's going to be late or you have to do it a more expensive way. we always talk about sales delayed or sales denied. i don't know for nike, probably a mix of the two i am not long, but i wouldn't short it >> fewer than 100 days until christmas at this point, fyi public service announcement. mike, good to see you. final trades up next ♪ ♪
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>> facebook down $40 from its high i think this is just another opportunity to buy the value of the thing >> steve >> planet fitness. people want out of their homes, off their pelotonclosed. >> guy >> stz. 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 my job is to not just entertain you but educate and teach. call me or tweet me@jimcramer. it doesn't matter what we, you and me, think. it matters what they think i'm talking about the people callin