tv Fast Money CNBC April 22, 2022 5:00pm-5:30pm EDT
dividend yield, this is a good name for your portfolio. >> i'll leave it there victoria, thank you very much v h have a good weekend. we'll see what apple delivers next week. have a great weekend "fast money" is now. right now on "fast money," sell-off on the street, the dow with its worst day since october 2020, falling for the fourth straight week. the s&p dropping for the third week in a row. the nasdaq finishing 2.5% lower today, down nearly 4% for the week do investors need to brace for more pain ahead? a monster week for tech, one of our traders will break down two charts he says could be critical for a beaten down sector later, before the opening bell rings monday morning, 72 hours from now, we'll get the traders premarket game plan and weekend checklist. welcome to "fast money."
i'm melissa lee from the heart of new york city's times square. sim seymour, jeff mills, adam parker we begin with the rough ride on wall street. markets closing out the week deep in the red with the s&p finishing near the lows of the day, 2.8%. that after loretta messer seemed to take a 75 basis point hike off the table. the index closing out the third straight down week and check out the biggest laggards this week netflix leading the pack, down 37%. there is weakness across sectors and phase energy, hca, healthcare, warner brothers, all seeing double digit losses what are the markets telling us? are we in the midst of a bigger grind lower? >> it seems that way based on what powell said yesterday, he set is up saying we're going to hike intercession i think equity markets were pricing in what we would call a soft landing a mild recession, a quarter or so.
i think today what happened is people start to price in the hard landing saw the yield curve flatten, saw all these names just get absolutely crushed so i think we're still in the -- for a little bit more tough sledding here as the market tries to digest what a hard -- a hard landing -- >> a hard landing is now 350 basis point hikes that seem to be priced into the market. and today's market and i can go back, it is 750 minutes since we digested the powell comments from yesterday that's a little under two days down 5.2% in the s&p 5.2% since we got those numbers and since, look, the short end of the curve rallied that much more we're within 20 basis points, 14-year highs in the short end so the stuff that gave up brown today are parts of the market that i think people are most concerned about. either companies very defensive, healthcare, consumer staples and google, which really underperformed megacap tech. and google is very defensive on a valuation. so i think you got a case google
down 17% and 13 sessions and we haven't lost apple yet, but i'm sure wee're going to talk about that. >> you have a stock that has a reasonable valuation and that is the first one that is now breaking to the downside what about the other stocks? what about apple, microsoft, tesla that has levitated and then no place to hide. healthcare, energy, places where investors were going and you've seen weakness there too. a lot has to do with the fact they were simply overbought, way above the 200 day moving average. they're feeling the pain too the thing i think is very important going into next week relative to earnings, think about stock like microsoft, the exact same price it was heading into the earnings last quarter i think you were on the show, they reported bang out earnings, the stock went up, but it failed at that rising -- sloping 200 day moving average to the yun side so now i think two things changed and they're not good the fed is more hostile, a hair trigger in term of any chink in earning and downtrend has been more confirmed.
>> hostile. >> it is nasty it is nasty. that's where i think we are. >> we also had an invasion of ukraine. >> can i bring some sunshine here on friday >> you can try >> i think i focus more on corporate earnings than the economy. maybe we could have a negative gdp, i have no idea, economists will tell us nine months after it happens i think what matters is corporate earnings and they'll be higher this year, pretty much guaranteed positive earnings growth we get choppy here when we get hawkish rhetoric on the other side of that, a lot of companies can grow their earnings you look back at next week on friday, a week from now, you'll see a good set of earnings results and decent guidance. what matters is gross margins, eq those are the ones that get killed the most. you got to pick stocks you know the margins can go up. >> while these guys might be a little more cautious on the markets, isn't it possible that a lot of the head winds provide
less cushion for margins, for margin growth? >> for sure they do. my interpretation of energy, it is down because oil is down and a correlation between the net income of the energy sector and change of oil price. it rolled over some. i think when i look out at tech, we talked about, when i look at energy, select industrials, consumer, earnings will be higher in -- >> but doesn't the move higher in rates mean we're supposed to be paying a different multiple for stocks i hear you on eps and i think we had enormous pull forward. i'm worried about comps. the fact we rewarded companies for getting somewhat close to 2019 but i worry about how we value stocks in this environment that's the biggest issue for this market. >> i hear you. underneath there is a lot of hypergrowth stuff that was too high first place i think 50% of small cap stocks trade below 15 times forward earnings the market is at 20 times forward. i think it is okay i think the risk reward is
pretty good and there is plenty of underlying opportunity. i'm not saying go out and go crazy. i'm saying -- >> welcome to sunshine. >> i agree with you longer term, for sure i think the big question is the market right about the fed is the fed going to hike enough to really compress those multiples, bring the apples, bring the microsofts back down to their average the answer is the market is wrong. they'll be right in the very near term. the fed is going to front load tightening i get laughed off the desk for saying this, i think inflation peaked and the fed will be given enough cover in that environment, these companies that are able to continue to grow earnings, the googles, fudge of acebook of th they end up doing very well. >> i don't think inflation has peaked i think the fed hikes more than anybody thinks they have said, and i've been saying this for the last three months, the fed does not want asset prices to go higher. they have a labor problem, they want labor force participation,
they want people to come back into the labor force, so you increase supply. so they don't want people speculating in the stock market, not going back to work and buying cryptocurrencies and not going back to work they're going to hike until the morale gets really terrible is what they're going to do i don't think that's going to have any impact on inflation f we look at what the dynamics of inflation are, we're in a shortage of goods. >> you think they're stupid. >> i don't think they're stupid. i think it is a different dynamic than we have seen for the last ten years, last 20 years. >> where we agree is that them raising rates won't solve the most acute imbalances. we had shortages in silicon because of shutdowns and fabs. them destroying demand -- >> tight monetary policy >> not going to crush demand so -- i think some of the acute stuff won't be solved by raising rates and they'll figure that out at some point on the path. more on that side of the room. >> the point between here and when they figure it out,
something is going to break. you look at the currency markets, they're already breaking look at cvs on investment grade bonds, they're starting to spike. you're seeing things break if i'm buying stocks, do i want to do that into that environment? or do i want to do it once -- >> hypergrowth stocks are down 75% already. some of it is in the price. >> i think we need to look at the full perspective of this i'm sure everybody is. but credit is really deteriorating. if you look at the high yield, which is a trading mechanism as well, it is a two-year lows. look at european corporate credit, the biggest pullback peak to this part of a troth in its history. and we're very early in a hiking cycle. i think the reliance on free money on the consumer balance sheet is part of -- look at what banks are doing. we have gotten an update from banks. we know how you look at the yield curve has gotten flatter the assault on the steepness or lack there of the yield curve
has begun again. banks are telling you a story about credit and the consumer. those are things that on days like today, yields went higher, are what are in focus. >> how much is the uncertainty about what the fed will do and how much could be solved and i use that in quotes if the fed had an intrameeting hike that came out of -- >> you said you have a question. >> you want to do it that way. raise your hand, do you think the markets will go higher if the fed came out and hiked 50 basis points on monday >> i don't i'm not raising my hand. >> we have been asking this question for a number of weeks now. how is this not priced into stocks it has been telegraphed so much. >> that's what's crazy to me what have we seen? we have talked about this for so long when about bullard throw out there the possibility of 75 basis points when he threw that out there, he led the fed down the path toward hawkishness since -- >> he's hawk heavy
>> right here we are and nobody wanted to -- >> i think the stock market has been behind the fed curve. the bond market is pricing it in we looked at that chart last night. hyg continuing to go down. if the stock market is behind the current trajectory projected, if the fed were to hike intermeeting, it would throw up -- >> i don't think the relationship statistically to the market is what matters it is fit fund futures and the perception of rates. that was strongly associated for months i think it is about the perception i think can they get incrementally hawk frisish from. i don't think they will. >> i don't think we have seen an environment where companies had a chance to tell you what their business is like, in a world where rates are 50 or 75 basis points higher and in a world where apple -- i don't think they have to drop a bomb on us, but the pull forward in so many companies, especially tech companies, megacap tech
companies, they have the best of all times, free money, stay at home, enterprise reinvesting, a lot of dynamics, that's the stuff that worries me. it is companies talking about the market they're in that are down that we haven't seen. >> i think the bottom line is that you can have a more sunshiny longer term outlook, but the bottom line here is that when the fed hikes, it is going to tighten things and the whole point of tightening things is slowing things down and the side effect say lower market. >> that's right. >> how do we trade this market >> it depends on how you are -- if you're a long-term investor, i don't think there is any reason to buy the dips now you want to sell the rips or calls against your positions in that if you're a shorter term trader, there is going to be a point here that things break and you have a great opportunity to buy. my point is i just don't think it is yet, we have got to wash this out yet so if you're a trader and want
to be a long side, hands off for now. >> to a bright spot, amidst the market shares of kimberly-clark spiking 8%, the company buying kleenex and cottonelle it wasn't the only staple seeing strength earlier this week procter & gamble best sales growth in 20 years. the real test may come next week coca-cola, whirlpool, mcdonald's could give more insight into pricing power inflation and strength of the dollar adam, you're looking at pepsi. >> i'm more nervous about pepsi. some of the staples have russia exposure, i think the top analyst came out with a bullish comp estimate today. i worry the bar could be high. so pepsi is one i would watch to see if that is one that breaks staples are part of the market i don't think are a good risk reward right now. >> i think if you have to be long, staples aren't a bad place
to be. they're expensive. no question about it i don't know the valuation matters in the near term, if you go back to 18, 15, 16, they came into that with reasonably high valuations, still outperforming the market there are places to look there, i wouldn't want to pile into staples. i pull a name off the board quickly, and i think you can stay with this longer. dollar general it is cheaper than a lot of these staples you're mentioning, tends to outperform in a slowing economy, but a lot less expensive and has higher growth. that's what you're looking for it is higher than a coke, for example. >> do investors look through head winds at this point do they look through on all of them >> i think some of the food stocks and the food producers have pricing power here. and so far they have been able to pass prices or smaller boxes. you're not fooling me. but i think if you look at mcdonald's, where i think in the
quick service space, mcdonald's is well positioned as anybody, their core market, u.s. same store sales, 3.5%, yes, they're losing 5% to 6% in sales in russia and china head winds. that's where i think the demand destruction that other parts of the economy are going to see, mcdonald's is not going to see i think at 25 times trailing, that's a multiple that relative to itself looks good. >> i think this is an environment where you want to sell wall street and buy main street stuff like mcdonald's, campbell's pork and beans, that one i like as well they have nice dividends, they're likely to get a boost. even if the economy is somewhat weak they'll probably still have pricing power. that's what you want to look for. >> i think underneath next week something to focus on is the labor force u.s. or non-u.s. all the wage pressures are in the u.s. people aren't showing up to work in the u.s. more and so the ceos are saying that's been my problem hey, mexico, vietnam, poland,
people are coming to work. i think we'll see with the multinationals, the wage pressure. >> we'll see a big dollar too. they can't not talk about the dollar. >> they have to. >> miss earnings. >> 2% head wind.alysts -- >> that was last quarter -- >> all right, coming up, staples one part of next week's massive earnings slate with big tech on deck, we'll find out why one says this is the most important chart in the market now later, a small cap smackdown, how to protect against weakness in the sector. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq,
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with a 2-year price guarantee. call today. welcome back to "fast money. big tech on deck earnings next week jeff says two tech names are heading for a breakdown. you walk through at least one. you talked about both of them, but why does this concern you? >> jump the gun on google, but i think it is worth paying attention to that chart.
seeing a stock with reasonable valuations break down below those march lows i think it is absolutely worth considering the fact that then what is next what is the next shoe to drop? take a stock like microsoft. we talked about that where could it go? if the valuation got back to an average over the next ten years -- from the past ten years, 20 times earnings on a pe basis, that's a 20% drawdown from current levels if the multiple retraces the average. google is breaking below average valuation. the stocks above average, they come down, there is still room. >> is it time to buy google? >> i don't know. i would short netflix against these companies right now into earnings you kind of hedge out on whatever they report and they're negatively correlated to inflation, low quality company, down here, 100 times forward cash flow. i would rather step aside and short netflix against it. >> that's aggressive i get it on the cash flow side after 60% move lower, maybe it
is the guy that bought netflix after q1 talking here. i go back to microsoft and say, the problem here along the microsoft -- everybody knows the technicals here this is microsoft and apple, 13% of the s&p and s&p that is down only 10% from all time highs. all the things we talked about but microsoft, your internet service, everything we're hering about first quarter, very robust this is the problem, because if they don't get -- if they get just to this or a little over or little below, god forbid, i think this is a big problem. microsoft, the breakdown in google that jeff pointed out, he's seeing some of that in microsoft, that concerns me for the market >> i guess the bottom line question is there still to come a flush in big cap technology which means another flush for the markets overall? >> that's my view. i think these things trade -- they vtrade very heavy if you think about valuation,
let's go to that, even if they get back to 20, why wouldn't they go through that why wouldn't valuations flush through that in this environment? every other asset class has gone beyond what everybody expected so why wouldn't you expect equities to do that. some people might try to buy the dip, but, again, going back to my view that i think rates go a lot higher than the market has priced in already, i think you have a problem with tech. >> coming up, looking for more tech trades, good. we have got options for you. that's right we're keeping up with the qs on "options action. traders break down their monday morning playbook what should you be watching? much more "fast money" back in two.
money. markets ending the week firmly in the red in all 11 s&p sectors negative in today's session. how should you be setting up for monday's trade what will be on your screen first thing? >> for me, the currency markets, in particular, the asian currency markets chinese and also u.s. dollar japanese yen i say that because both of those countries are the largest holders of treasuries. if they actually devalue, that could be a negative impact on the treasury market. maybe a positive, but it could be a negative. when we saw the rnb revalue in the past, it was a risk off move start watching those currency markets. >> i'm watching the fed wire this is a fed that is -- every day they have an opportunity to do it. as i said earlier in the show, we're within a whisper of not just with year highs, but 15 year highs this is a straight move up, painful for the consumer yields need to slow down >> i'm interested to look at a stock like facebook. one of these big cap tech stock
that is way below market multiple the growth is good huge free cash flow margins, huge growth margins. does a stock like that hold its head a little bit better than some of the names that haven't got hit as hard. that's an interesting tell whether that's a good place to be or not. >> fed fund futures and oil prices two things that will tell you where risk is heading into monday. >> all right it is time now on this friday for the final trade. boy, did that go fast. >> good to be here on the desk. >> really. >> group hug here. >> tim seymour >> so i -- back to what broke down today and really it has been a two-day trade alcoa, free port mac, pulled back almost 15% over a couple of sessions i think this commodity pullback is an opportunity to buy. >> jeff? >> so boston scientific, a healthcare name that is not as stretched as the overall sector. breaking out from a large two-year base. i think it goes higher here. >> adam parker, thank you for
joining us here. >> ray of sunshine. >> i tried, it didn't work you rained on it i like united health down 3% today. anytime it is down 3%, i want to buy some i know 6, 12, 18 tos later it will be higher. >> better than google. >> brian kelly. >> if we're talking about pricing power, that's what we talked about the whole show, what companies are out there, you want a product that people have to buy no matter what to me, that's altria, cigarette and booze. most people will pay whatever price. >> this is domestic smoking as opposed to -- >> i am an all country -- >> higher input costs too. >> they can raise rates, raise prices >> eventually they'll need healthcare. >> full circle all right. thanks so much for watching "fast money. great to have you here with all these guys here in house we'll see you back here not tomorrow, monday, at 5:00 p.m.
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it is a friday, with a big market sell-off. it is time for "options action." i'm melissa lee in times square along with cart er worth, mike khouw and tony zhang the s&p and the nasdaq both close out a third week in a row of losses across all listed options in the u.s and mike you noted this has only occurred six times in the past two years. what do you think this means >> yeah, i mean, i think we need to take a look at that and i think we need to take a look at other things in the options market too first thing i would say is that obviously there is a tremendous amount of concern right now. a lot of the unusual put volume we saw was not retail traders going out and buying puts on the st