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tv   Fast Money  CNBC  June 23, 2022 5:00pm-6:00pm EDT

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the s&p 500 gained just about 1% just below the 3800 level which has kind of capped the market. bank stocks after the fed stress test results taking them in stride no real surprises there. no too many changes. fedex though as we said just reported it was a beat on the bottom line pretty strong guidance stock up 2.4%. that does it for overtime. "fast money" begins now. right now on fast, the great rate break down. ten-year yields touching the 30% mark, dropping nearly 50 basis points in a matter of days what does this move mean is this a good thing or bad thing for stocks plus, we're all over the after hours action in shares of fedex. the company's conference call just kicking off and a big sea change for value st stocks what new additions say about their growth prospects i'm melissa lee. on the desk tonight, dan, karen,
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guy, and tim that's his chair he'll pop in any minute now. we start off with the latest fed stress test. the results crossing the tape within the last hour leslie picker has the details. she's there, i believe leslie >> yes, the banking system looks resilient. the 33 firms suffered a hypot hypothetical $600 billion in losses under the fed's severe scenario, but still maintained capital levels more than doubled the regulatory threshold now the ratio metric that represents the financial health of the banking system declined to 9.7%. among the largest banks identified as category one by the fed, state street and morgan stanley demonstrated the highest ratios bank of america and
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goldman had the lowest this year's stress test scenario comprised a severe global recession plus turmoil in real estate and debt markets. it was tougher than the 2021 test with a peak 10% unemployment rate and gdp decline and a 55% slump in equity prices. the firms are expected, although not required, to announce their specific plans for buybacks and dividends on monday after market, which is the key part of this test that investors will be paying close attention to. melissa? >> leslie, thank you banks were having a rough day even before these results came out. really not many surprises here, guy. what did you think >> i think we all would acknowledge that these banks had their balance sheets in good order. i don't think that was a surprise i find it fascinating on a day that deutsche bank is down 11% i think there's a contagion out there. with that said, i think banks set up okay into the next couple
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of weeks into earnings because my view of the broader market is we have a significant rally, i believe, in our midst over the next week, two weeks so nothing stuck out to me i'll say this. the goldman buy back of $7.5 million given a market cap they have is pretty interesting to me. i think goldman sets up well here >> i agree i'm long banks the one thing i think we talked about last quarter and we'll see this quarter is the adjustment they need to make. it's sort of a look hit in that the assets they own as rates go up, the mark to market goes down so that doesn't leave them as much of a cushion for capital either in dividends or buybacks. i would think all of them would rather maintain their dividend because that's what shareholders really want, that certainty. so less room for buybacks, but the big question is just going to be what do they see in the economy. i don't know that people will
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care what happened this quarter, which i think was probably okay other than that mark to market it's really a question of are we going to see jamie dimon again talking about the weather. storm clouds, hurricane, i don't know but to me, the valuation jpmorgan here sets up. >> and i don't know if it's just about they're going to say or about what the performance or lack of performance of the whole group is saying about the economy. go back and look at jpmorgan, for example, it made a new all time high. the last one it made was in late october around the end of q3 i think they were signals, at least investors, that they did get expensive. they had a tailwind of reserve releases and now they're saying to guy's point, okay, where do you have exposure? if energy came back in credit situation in europe who knows what sort of exposure you have to asia so to me, they don't act particularly well. the other is the u.s. consumer you saw that jpmorgan laid off
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or is going to reassign and layoff people in their group i think their performance and ability to keep pace says something more about the broader macro backdrop >> i agree that everybody's going to be listening carefully to what the ceos say on the conference calls, particularly jamie dimon, to see if he's going to narrow it down to a range of one or two. we have seen extraordinary flattening just recently even with the spike higher in the two-year and the coming in of the ten-year >> but is the flat yield curve where i go here in circles i think we've priced in a flatter yield curve. fee income hits. i think that's really what we're talking about. mortgage fee income. investment banking banks trading 40% light to where
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they were in february. bank of america, 38% down since february 20. i think the banks did a great job of resetting expectations and i think where consensus estimates will be on q2. i think we want to hear this view we've said we don't even think you're getting real eps downgrades until we have a chance to hear from second quarter earnings from some places outside of banks, but the valuations are compelling and the one place where banks concern me a pbit was a capital return profile and i just wonder if they're going to have to be more cautious here i don't think the investors are going to like that >> tim brings up a really important point which is that we have this idea that banks should tray trade with a two-year, ten-year spread if they keep telling us net interest margin will improve or
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income, that's important to me >> to tim's point, in terms of being conservative with their capital, if you're jamie dimon, you're saying it could be supersandy then you are going to be conservative with your capital and he indicated that already. but you wonder how much more he would ratchet up that warning come next conference >> my sense he's not going to ratchet that up. i think he went as far off the curve. that would surprise me with that said, yeah, it's about risk and how much risk you're willing to take, but then you look at it, goldman sachs for example quickly, that's trading now at this 285 level at 7.5 times next year's numbers right around book value in an environment where i think we all realize their fixed income currency and commodities is probably crushing it they won't get rewarded for it necessarily, but i think at these levels into earnings beginning middle of july, i think goldman sets up well >> in terms of systemic risk, how should we think about that
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it was a huge spike we saw in commodities that had us so concerned. >> yeah, no, guy makes a good point about the investment banks and what goldman is able to do in this environment. there's some of their peers that don't have those capabilities. the other thing that tim mentioned is a lot of those capital market activities, they're done it's over for the year so you start thinking about what does 2023 look like. i guess i'll just say this if jamie dimon were to change his tune just a few weeks after from a couple months earlier it's not a good look here especially and we know how early we are in sort of the economic data starting to slow here that's my personal view. so i think he'll likely take a -- listen, their earnings are m coing quick. they're july 14th. we're almost to the end of the quarter here so again, i think it really comes comes down to expectations if the stock were to go much lower, it rallies out of it. but if it rallies at quarter
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end, that's a tough set up >> let's get more with the head of u.s. bank equity strategy gerard, any surprises? any questions that still remain in your head >> no, actually, the results came in nicely the industry, as you opened up in your segment, is very re resilient. one of the major risks that we hear from investors today is that they're worried about create losses going higher and what this test shows us that unlike in '08 and '09 when 18 out of the 20 largest banks cut or eliminated their dividends, that's noint going to happen ths time these banks are well capitalized. dividends are going to be safe through the downturn and i think that's going to be safe as people realize that. >> it's karen. thanks for being on today. as a long suffering i guess bank holder, what do you think it will take to get the sentiment
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around these bank stocks to lift in. >> karen, you're spot on about the sentiment. it's quite negative. i've been in boston all week visiting with investors and they're either apathetic or they just don't want to move into the banks. inflection point we're looking for is net interest income growth people don't realize rising interest rates, you touched that about the margin expansion you are going to see amazing numbers. we're forecasting bank of america could have 15 to 20% revenue growth this year in net interest income because of the rise in rates. so i think what investors need to see is that as this revenue growth comes in better than expected, especially in the third quarter when you're going to have the full impact of the july fed funds rate crease as well as june, it's going to be very powerful. and people are going to see the credit qualify for the banks,
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they have derisked these the real risk is outside the ban banking system so i think once people realize credit is not that bad and the revenue growth is strong, that changes the sentiment hopefully in the latter part of this year. >> i think you were listening at the beginning, we mentioned deutsche bank being down 52% germany, i think the fifth largest. not an insignificant bank. how worried should we be that there's potentially something more there >> it's interesting because obviously deutsch or credit suisse have been struggling for years. both those companies have had challenges that are somewhat unique to them there's always the worry that could be counterparty risk but that's what that stress test does takes not just into account the losses in credit cards or commercial real estate, but
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losses all our banks come through and yes, they're going to have lower earnings, no doubt about it n a severe snare kcenario, but come through with healthy capital it is really something to keep an eye on. especially in a bank that large. >> so, it's tim. have banks therefore priced in at least the expectations in the same waythat the market has on recession? i'm talking about credit quality in places where banks are going to have to reserve what do you think about valuations here relative to the environment you see? >> no, i think you're right. they have priced in definitely some part of the recessionary environment with higher credit losses the valuations look to us to be attractive now they're not as cheap as they were march 23rd, 2020, and i'm not suggesting they're going to get that low, but they're off the highs we saw in january and
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the banks month to date in january, the index was up 13% and has come off dramatically since then but when you look at bank stocks trading just above book value on average, 1.5 times tangible, they start to get interesting. especially if we hit this inflection point you can really see people coming back into stocks they're underowned sentiment is not positive. at these valuation level, yes, there's limited downside from here, but i think as people realize the banks just aren't going to have the issues they had in '08 and '09, that's going to be the real rallying point for owning these names >> that's a benefit of the stress test. a snapshot into how these banks will perform in such downturns can you give us some historical context as what the stocks have done in past recessions? >> when you look at 1990 and 2008 and '09, the bank stocks were hit extremely hard. traded down to respectively
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approximately 50% of book in 1990 and about 43% of book in 2008, 2009 in 2001, which is what we're thinking this is going to look like, the banks never broke book value. the problems in 2001 were the dot com implosion. it was a financial problem, not a credit problem that's what we think is going to happen this time the problems are outside the banking industry you know, the fed with qt, they created such an asset bubble with qe, now they're deflating it so the problems are going to be in the financial markets more so than in credit we don't think it's a credit debacle that's going to get us this time. it's going to be more the deflationary asset prices that chair powell talked about yesterday. >> thanks so much. >> thank you, everyone >> gerard cassidy. tim, what's the trade here >> i think money center banks
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first of all within this sphere of banks and insurance companies look the most interesting because they're the most defensive. i'm worried about the regionals. some credit exposure with the consumer finance companies and a lot of those companies are painted with a high multiple brush. i would look at a bank of america around 1.1 very attractive. near those levels you talked about with a company that has the most exposure across the core businesses. i realize mortgage exposure has been a major tail wind bank of america's right there. of the money center banks, that's the one with the most balance and value. and is the cheapest. >> it's interesting, right, we're in the early cycles of this the stock market topped out in january. when you put it all together and think about the likelihood that housing is going to do a similar turn we had in the s&p 500, 20% or something, that activities are going to slow down a lot of the other places where
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some of these money center banks do, it just doesn't seem like a great environment. i'd rather go with a goldman where guy just mentioned their going to trade their way out of this really if you think about it then they'll be well set up. in 2023, a lot of the capital markets activity comes back, the ipo windows open, we see m&a, that's what they're really good at no matter what spread you're focused on, it just doesn't seem like a good buy. >> karen, you mentioned sentiment and that's the banks have been wrapped up so much in negative sent. towards them if there's a recession, that's not going to be good for sentiment in any way >> yes, i don't imagine the sentiment will lift. i agree with you there i do think though if we are in a recession, i think that what's going to work in the markets, not the high fliers. i don't think those are going to work and ultimately, i think there's a place for value. and if you look at some of the
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value etfs, some of the biggest exposure they have is banks. because they are the cheapest. and you know, the security, giv given how strong their balance sheets are, nothing like '08 and '09. >> that's a pretty historic move to the downside. you think about what's taken place in this quarter specifically some of the trading activity it all lines up for what goldman sachs has done will they get rewarded for that? i think they'll post earnings up for the long-term. >> coming up, fedex shares on the move after the company rep reports results. and treasury yields taking a leg lower, but what does that mean for stocks don't go anywhere. "fast money's" back in two i'm what you call a boutique hotel. i'm looking to provide a more unique experience.
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> . earnings alert on fedex. frank holland's got the latest from the call.
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hey, frank >> well, fedex moving higher on better than expected guidance in the first earnings call for the new ceo. very optimistic considering some of the commentary on the call. above the estimates. the results were mixed despite the eps. expressing ground revenues and margins were below freight was the standout >> we have worked through many networks efficiencies caused by labor shortages. although wage rates remain higher than this time last year, they are stabilizing still, covid-related conditions slowed global recovery and pressured second half performance. >> he was also concerned with the global slow down and some of the geopolitical pressures, but double digit increases for
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express and ground >> thank you karen, you own this one. >> i do. i like what they're saying about the guidance tiny miss on eps and revenue, but they seem to be getting the yield numbers on the packages are really good. i like that. they did do an aggressive buyback. they still have more to do in a buyback. i want to hear what they say on the call the calls, you get some nuance there. to be honest, i am a shareholder, but sometimes, they've been a little bit of a overpromiser, underdeliverer so i like the range is higher than consensus and i hope they feel so good about their business -- well, he's been kind of the guy for a while. so hopefully this is a either promise and deliver or underperformance and overdeliver. that would be great. >> frank mentioned freight, which was excellent. the problem is it's only 12% of their revenue. express is where basically you
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got to boil this down to how they do and it wasn't bad. the operating margins weren't as bad as i thought now you start doing the math ten timesish even midpoint of next year's numbers with maybe 10, 11% eps growth that starts to make sense and then you add in this de shaw thing which i'm certain people are starting to talk about i think that's a tail wind as well >> the other shareholder on the panel tonight, tim. >> the de shaw factor is really important and they in those headlines talked about some kogs related to business optimization i think this is a company that's focused on being more efficient. i think there could be some surprise tailwinds in terms of margi margins. shipping costs could be coming down back to the stock, you have to look at fedex has outperformed the s&p by 30% since april
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some of this is off of a very oversold base. there have been moments where fedex has very much led this market not ready to call dow theory here, but when you look at it from may of 2020 to december 2020, it outperformed the s&p by 100% and that was aperiod wher markets had a huge shot in the arm. you have to watch this it's done this before and it's doing it now >> we are just getting started here on "fast money. here's what's coming up next >> treasury yields taking a nose dive as wall street weighs recession risks. the impact it can have on your portfolio, next. plus, flying out of new jersey maybe not. united slashing its flights to its northeast hub. so buckle in the traders are flying into the airline trade next you're watching "fast money" live from the nasdaq market site in times square. we're back right after this.
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welcome back to "fast money" chlts benchmark trading around two-week lows. rick santelli is following the action from the chicago cme. rick, always great to see you, particularly on "fast money. and it just seems like the volatility that we've seen in the bond market seems extraordinary. can you put it into context why do you think we're seeing such whip saw swings in yields? >> well i think one of the main reasons of late is not only the recession talk domestically, but globally in sticking to that global premise, i do believe europe and large part, especially germany after the 14th when the big
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valve of the gas neck from putin starts to get cranked tighter is really almost leading the market i'll tell you what i mean. now let's look at a couple of charts here's a three-day chart of two-year note yields we've lost a lot of ground the more recessionary talk we hear, the more rates are going down in a flight to safety for good credit. here's where it gets interesting. yes, the chairman talked in front of both side of the aisle the last 36 hours, but as much he was hawkish, look at bund yields long before the chairman took his microphone, they moved from 165 down into the 140s i think that's key because i think all of a sudden, we are starting to see many of the issues in europe come home to roost in the marketplace and that's having an effect on us. you can see it in the bund ten-year spread. and finally, it's not only having an effect on us, as hawkish as the chairman was, look at these fed fund futures
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the last three days. they're up 22 ticks from the low closing yield. that means less fed in the ma marketplace and the market gets what it wants. >> rick, not that i necessarily want to do this to you, i'm loving the fact you're here and i'm going to wind you up i thought one of the many mandates of the federal reserve were stable prices when ten-year yields move 48 basis points in effectively three and a half, four days, that's anything but stable and that's been going on for the last year and a half i don't know where they want stability because it's not in the bond market, which should be the most liquid asset on the planet >> i couldn't agree more and i'll take it a step further since you did wind me up a little bit many believe the chairman was frank and hawkish the last couple of days but in a way, he got under my skin, especially when they asked what he thought about some of the fiscal policies and legislation past, present, and future and he basically said hey, i stick to
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my own knitting here, which really goes against the grain of what he said from about march 2020 to the end or mid 2021 when he was in essence begging for more fiscal additives inside the economy. i guess what i'm getting at here is the market is unmoored for a very good reason because policy was unmoored and the fed was the enabler. you can't spend too much money you can't shrink too much money unless the fed condones some of the big spending policies of the administration >> it's karen. thanks for being on. this probably won't wind you up, but i'll ask it anyway the qt part of it, we haven't fully seen that yet. how much do you think that will destabilize the market the bond markets >> i think it will yeah i think it's going to. i think that the bond market ride's going to stay volatile but i think at the end of the day, i see inflation in many
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ways has peaked. commodity inflation in my opinion already peaked the issue isn't whether it peaked i think that's going to be a war of words down the road prices most likely in many of the stickiest parts of the inflationary areas are going to remain very sticky and what looks like inflation hasn't kept up with respect to inflation ultimately wages are going to be sticky even when inflation starting to come down and that's going to create the next headache for the fed >> rick, thank you so much great to see you >> thanks, melissa >> rick santelli from chicago. bond yields may have been down today, but stocks were up. nasdaq rising about a percent and a half are falling bond yields and bond yields that are falling this precipitously good or bad for
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stocks karen? what do you think? >> i think good to the extent bond yields are falling because inflation is coming down and to the extent that inflation going up was we saw what that did. the reversal of that i think to be good. okay yeah thumb's up >> do you think that bond yields are falling because inflation is coming down? >> i think there's the perception that inflation is peaking. tim talks about this yesterday all the commodities. lumber and i think copper and gas. oil. all of those seem to have turned at the moment. >> tim, what do you say then >> i feel like you changed the game on me long-term i don't remember that was part of the question asked originally, but i'll answer the question and i'll say bad. i think ultimately we know that the first -- oh, yes is that it really is a sign today of pmis that were back to
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covid lows u.s. manufacturing this morning, 52.1 not far away from contraction. we've gotten data points over the last three weeks, so this is rates going lower because people are more concerned about the economy. let's be clear fed funds rate went from 370 down to 340, but that is good for stocks so i'm not going to hedge my answer. i'm going to say negative. but i think yield's going down and karen mentioned inflation. that's a good reason but we're going down now because people are worried about the economy. >> so sense we're all playing choose your own adventure, why should i be any different? i think in the short-term, it's going tok be good if you want anecdotal evidence, today's everything you need to know the nasdaq, the most interest rate sensitive names i think that's going to continue for the next three, four weeks long-term, i think it's really bad rates are going down because it speaks to a significant slowdown and earnings are going
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to take a bath on the back of that >> ark was up 7% today so good for certain parts of the market in a big way. dan? >> yeah. listen if you look at the ten-year u.s. treasury yield over the last 40 years, let's focus on 2020, it was above 6% in the year 2000, topped out in 2007 it was lower than that we topped out in 2018. it was three and a quarter percent. just topped out. my point is rates are never going up meaningfully unless the sovereigns around the globe are able to reduce the size of their balance sheets because they can't service all this debt. so we just have this spike from basically zero to 3.5% in the ten-year or whatever we were 50 bips at the low and i suspect it comes back that's fine for stocks >> coming up, garden state grounded. airlines is making to ease travel delays we've got a fast pitch coming your way our next guest has a stock she says that has some heat to it.
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welcome back to "fast money. shares of united airlines losing altitude today starting next week, the carrier
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will cut about 12% of flights from newark airport in an effort to reduce delays that have disrupted travel plans this year tim, what do you make of this? it seems like bad news, but could be good for the airline. >> yeah. i think the story for the airline industry is really trying get back on 2 feet from a staffing and labor perspective demand is fine we heard everyone from united to delta talk about profitability levels and where they are relative to 2019 and for those that didn't splurge on debt and delete the balance sheet, i think it's a good story. the disconnect in airlines is something i've been talking about for a month and during that month, they've probably gone down 10 to 15%. again, the dieynamics around lar and getting back to work i don't think are indicative of demand >> look at airbnb. i know you know this, mel.
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that was the a in the dawn trade. this was $158 stock at the time. i think it made a new low today. i think. don't at many if i'm wrong, but it was damn close and it's trading as if it's going out of business i thought the quarter in early may bwas good so i don't know. my sense is there are going to be some bargains out there i thought it was a bargain at 150. so i think think it's at 94. >> let's stick with the air space. one says one aircraft leasing company could be ready for takeoff. katrina, you're taking a look at air cap? >> it's a $9 billion irish aircraft leasing and in this type of business, the company doubled its scale. and this is a business where scale and economies of scale really matter. when you get big, you become more important to your airline customers and you have a much more diversified fleet you can
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offer to lease to them and you also become much more important to the aircraft manufacturers. that's important particularly when we're supply constrained. it's debt, secured debt. debt that's levered against a secure asset that they're earning good yields on then finally, air cap is really well positioned in terms of having a good fleet. it has new orders of aircraft and 90% of those are new technology aircraft and the aircraft these airlines need so you talk about what happened today at united. we are really positive about those capacity cuts to the extent that airline capacity is scarcer. a lot of the cuts have been in the regional part of the market and that's not where air cap plays. they are a really good partner to these airlines and to the extent the airlines have had a
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rough time over the last couple of years, particularly close to the pandemic, those losses on their balance sheet mean they cannot raise further debt that they need to invest in their fleet in order to reduce the emissions and deliver the excess capacity to their customers. so we think it's a great space talk about valuation you maybe talking about united airlines trading cheap i've got a secured airline business that we think can earn low to mid teens roe that's traded at 65% of its book value. we see the stock as an easy double and if you want to get optimistic and we see multiple appreciation, this thing is a trip until the next three years which is why we like aercap. >> i love the accent, by the way. the question though is how much exposure do they have the sort of net jets and those kind of businesses which seem to be to have peaked in terms of the demand for airlines and used
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aircraft coming on to the market what's your exposure there >> the big play in the newer part of the aircraft fleet, they don't play in the private jet fleet so they're not exposed to those net jets actually what's going to happen is those private travelers are more likely to come back into the commercial market so that will benefit the airlines and aercap so we're not worried about that the other space where aercap plays, with the rising commodity prices, we're seeing more demand that's another part of the story that's really overlooked >> thanks for coming on. >> thank you very having me. >> all right time to vote are you going to buy katrina's pitch on aercap? >> i'm going to turn my smart board around and say that on may 17th, go back and look at the quarter, it was an extraordinary
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quarter. was not rewarded stock has been cut in half since january highs. i like what she's pitching there, mel >> dan >> not my -- i'm not a buyer she talked about all that debt this is a $9 billion equity value. it's got a billion and change in cash, but it's got nearly 49 billion in debt. she said it's secured. i get it she knows the company inside and out. i'm just saying in this environment, i'm not sure that's interesting to me. we think there's potentially credit issues. >> karen >> well, i heard the word, air, no way would i like this, right, but i didn't hate it so i don't know. i pass, but i thought it was a good pitch interesting. i like the detail. i liked the pitch, but it's not for me >> so you like the pitch, but pass on the stock. yeah >> yes >> tim >> look, i love the irish and i'm a buyer and ultimately what i heard are a couple of things first of all, guy refers to to
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may quarter. those are great numbers. talked about demand in the twin aisle planes i think this is a stock that's been totally nailed because they're worried about the low capital cost it's very cheap here >> the traders have spoeken, but it is your turn. are you buying katrina dudley's fast pitch on aercap we'll bring you the results after the show coming up, shares of schlumberger losing today. we'll drill down into the trade next plus, meta, tfx neliand paypal making their move to a new home tomorrow oh, we can help with that. okay, imagine this. your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, like asap! so basically i can pick the right plan for each employee.
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like any family, the auburns all have... individual priorities. some like strategic diversification. some like a little comfort, to balance out the risk. others want immediate gratification... and long-term gratification,too.
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they have their own interests, but at the end of the day there's nothing like being... a gold-owner. visit to see why gold is everyone's asset. welcome back check out wti crude falling again today closing at its lowest level since may 10th. oil prices down about 15% from their highs. one options trader is calling an end to the rally tony >> yeah, so down today traded about two times the active daily volume and one single trade accounted for
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nearly 15% of the volume in this name where traders sold 4,000 contracts of the september 37.5 calls and 4,000 contracts of the september 42.5 calls, collecting a net credit of about $2.76 across these two trades per share. we have seen a lot of trades like this over the past few days and weeks likely tied to an equity position that has a market value of around $28 million as of today's close. really exchanging any further upside mhere for names like this about 7% of the stocks down in income over the next three months so seeing fairly limited upside and wanting short-term income in change for that. >> guy, you like slv >> i do, but it's down 31% in six trading days 317 to 221 obviously sluchlumberger a big portion of that. on valuation, you have to love it, but then you have to say to
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yourself it seems like people are selling first, asking questions later. >> the underperformance of t the -- it's as wide as it's been in quite some time it's gigantic. >> tony, thanks. for more options action, tune in to the full show tomorrow 5:30 eastern time coming up, three big tech names making their way into the benchmark and there's still time to vote on katrina's fast pitch. are you buying aercap? head over to twitter to cast your vote and throughout june, we are celebrating pride month here's cnbc's executive producer >> no matter who you are or where you're from, personal and professional success is built on a foundation of confidence and self-worth and for so many lgbtq plus youth, that foundation has been cracked by shame,
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welcome back a couple of one-time high fgrowh names are set to make a big move tomorrow meta, netflix and paypal set to be added to the value index. also in the growth index, but waiting to be reduced. is this the new face of value investing? tim, really a sign of thmes in terms of what has gone on in terms of the markets >> this is, look, this is not a badge of honor for these companies, but again, the valuations have priced in. i think for all three of them, i would say meta, it's the one that's the most palatable. not just because we've digested a low multiple on facebook for a long time, but i think it gets it more into that commoditized business, which they have. they have a recurring business model. stability in their platform and
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it's not a bad thing i think we've struggled with other issues at facebook maybe there's cyclicality here on valuation, we've talked about this i feel like almost all week it's almost hard not to get excited by six times ebitda. the netflix story to me, which i'm long and was long from a higher number, but i think the story there is still one of growth it may not be so much in the u.s., but i think the international growth story is still there. i think the revenue growth story is still there i think they have pricing power. >> what's the name of the index? >> value >> i thought it was going something else entirely. like dog house or something. i mean, i agree with tim on the meta story i know dan would be like have at it >> bought it today >> wait? you bought meta today? >> but here's the thing. i honestly think we have 20% downside double or triple over the next
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few years. that is value. we laid out the case if 223 estimates are anywhere near correct, this is the cheapest you'll ever have an opportunity to buy meta. >> did our whole discussion about meta yesterday >> i spoke for before you did. here's the thing i actually think this group, what tim said about all these name, paypal, i bought it last month. bought more today. it's trading about two and a half times next year's expected sales. and sales growth trading with it is down almost 80% they are value fo forget much they're down think about their opportunities and their ability. >> think about netflix, trading 15 times next year's numbers with two and a half times revenue. it is value at this point. >> yeah. karen? >> there's no more, meta's value. >> coming up, there's a few minutes left to vote for
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katrina's fast pitch head over to twitter to vote results and final trades are next (mom allen) verizon just gave us all a brand new iphone 13. (dad allen) we've been customers for years. (dad brown) we got iphone 13s, too. switched two minutes ago, literally right before this. (vo) now everyone can get a new iphone 13 on us on america's most reliable 5g network. for every customer. current, new, everyone. to show the love. another crazy day? on america's most reliable 5g network. of course—you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want —your team, ours or a mix of both. with the nation's largest ip network. from the most innovative company. bring on today with comcast business. powering possibilities.™
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(mom allen) verizon just gave us all a brand new iphone 13. (dad allen) we've been customers for years. (dad brown) we got iphone 13s, too. switched two minutes ago, literally right before this. (vo) now everyone can get a new iphone 13 on us on america's most reliable 5g network. for every customer. current, new, everyone. to show the love. time to find out if you're
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buying katrina's fast pitch on aercap just going to keep it plain and simple 73% said no. 27% said yes >> she did a good job. >> great job >> yes >> hard sell >> right didn't quite work. time for the final trade tim. >> yeah, i thought katrina would have been walking on sunshine. see what i did there in the meantime, delta belongs in that value club dal. six types next year. i think that isvalue territory >> karen >> value territory and dan on board. i got to go with meta. how could i not? >> because dan's for it? >> i own it. they were added to this value thing, dog house club. >> all right dan. >> i think it's really important that seeing these three stocks that were poster childs for the bull market going into a value index so that's why they're looking interesting. paypal is interesting. >> mel, you think the knicks
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make a move in the draft tonight, up or down? >> up. >> it's amazing. qualcomm is too cheap here as well >> thanks for watching see you back tomorrow. "mad money with jim cramer" starts right now i am here to level the playing field. there always is a bull market somewhere. mad money starts now. >> i am kramer. i am just trying to make money. inflation has


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