Transcripts For CNBC Fast Money 20171009

4 today hitting its lowest level in more than 4 years this despite the announcement that it is giving activist investors nelson peltz a seat on its board. With a techie dividend, widely held share base this might be one of the most tempting stocks to buy the question is simple though. Is this an ultimate value play or value trap . Guy . I would continue to say and i think weve been steadfast on this one, its a value trap. Now the good news i think today is heavy volume, yeah, traded 140 million shares typically trades about maybe 40 million or so. Thats a good sign maybe you flush a lot of people finally out of this name, but on friday while you were galavanting someplace and mcc was sitting in that middle seat, she asked a similar question and i said Thomas Edison could come back and run ge and that wouldnt save it ill say it again tonight. So are we getting towards interesting levels i would say yes. Only in terms of what we saw in terms of volume and in terms of what they saw you for effectively the Earnings Release on october 20th. Ive tried to own ge three or four times this year i thought i couldnt quit ge but now i have to quit ge. You have to believe in the turn around story the market is not believing in the turn around story. Yes, we had capitulation today you could wait until ge proves it to you, until the Market Action and price proves it to you. I dont think you have to bother. The nod from analysts is we dont know what this bisz will actually be at the end of the day. There could be massive restructurin restructurings, there could be businesses that are completely exited we dont know what this is going to look like. These are all analysts wrong on the stock when b. K. Wants to quit ge i want to buy ge. Sell it to you. Again, guys trade was for yesterday. That was yesterdays trade stocks now down almost 30 off the highs. 130 billion company to act like this company is totally a waste of space, its trading at a multiple that is, you know, probably appropriate to say you have them priced at an enormous amount of bad news from 2 bucks down to 1. 50. This is a kitchen sink they should have kitchen sinked two weeks ago. Thats the problem here. I get it i think people want to read more into this. The cfo bornstein was supposed to be part of the solution now hes out on his ear. To say they can make a quick turn around is tough to say they have an enormous amount of Intrinsic Value how long are you willing to wait for the turn around to happen how long of an investment is this if they continue to go after the core businesses, oil, gas, power, probably 45 of the business you can make an argument that this is a cyclical bottom for those industries. Maybe its a secular trend that continues on there this valuation, melissa, i can hang in here. If its a cyclical down turn for those industries, why wouldnt you want to buy the oil and gas . Why not go into those areas then rather ladle a turn around story . Because this is a diversified companies that is one of the most technologically savvy companies in the time. So this isnt just an oil gas play, utilities play those are businesses that they make massive investments at the top. By the way, trian, two years ago those guys were telling us that was the bottom of the cycle. Those guys, part of the noise around here is you have an active investor whos been wrong. Thats part of why this story appears ugly these guys have been out there campaigning for a stock that frankly theyve been on the wrong side of. Karen so i think well certainly its been a value trap up until now since the stock continues to come in. Im kind of intrigued by it though for a lot of reasons tim says this is a premiere company they have tremendous assets. We dont know what the portfolio will look like but theyre not just sitting around, right we do have a big change in the ceo who seems very committed to shaking things up. He has he seems to have no sacred cows here so, i mean, i think hell just hope to try to create value and its interesting, sometimes you see these value traps that trade at ridiculous multiples and all of a sudden something comes along and theyre no longer a trap. Gm was a trap, trap, trap. True. Then it became trade. Valuation becomes the base model. It sits there gm sat there and it got cheaper and cheaper. Then something happened. I actually have many times bought way too early i dont mind being too early if ultimately youre right, but i think youre actually here ge is intriguing because there is change in the works. Karen mentioned sacred cows no sacred cows sacred cow being a dividend maybe . Were at 4 . If this cfo is committed to cost cutting could we see the dividend cut as well i think that would be a major problem for the stock. The shareholders the dividend, not eliminating it cutting it. I think theres better places that this would be my view if i was a cfo. Better places to make changes than go and cut that dividend. You can get the stock price up if you say the right things, if you create some kind of vision for the company. I just havent seen it and i would agree with you guys in that this is a good company with good pieces, parts, i just dont know what its going to look like so id rather wait for the momentum to turn on it before i got back into it. Cutting the dividend, i would interpret it as them saying the stock is here, its probably going to stay here for the foreseeable future if they were to cut the dividend here, my wheels start to turn saying the yield is too high, we dont see our stock getting back to levels where the dividend goes down. Right. Thats how i would look at it i dont think that would be a good thing at all. I will say this. Weve all made arguments october 20th they record earnings i dont think theres any reason to pile in now ahead of it wait and see b. K. s point, the up side. Expectations are low going into it. Expectations are absurdly low. 4 dividends 3. 7, 3. 8, its not like this is a large dividend hold on a second, we need to rebalance this things that could be callous, they could sell off the baker hughes company. They bought it. I get that. If youre making a call that youre in a secular decline, we are going to spin off some core assets, locomotives, baker hughes bad buy . French power utility company, bad buy. Lets get back to basics i think investors would take this as this is changed. Theyre raising some cash for me now. To your point before, you said that 43 of the business was oil and gas. If they sell off baker hughes, then youre rerating the company essentially. So the whole point is that we dont know what that company will look like because everything is on the table to be sold or to be restructured. And i get it, but i think thats in the earnings estimates for the company. Youve knocked off, 25, maybe 35 of the eps expectation theres a big argument that Energy Assets are in a secular decline, not a cyclical decline or whats been a difficult cycle. Oil and gas assets that were bought two years ago. One thing. If they do a spinoff, its not like the value is zero spinoff. Do a spin, right . You have whatever new co is. Theres value there. Right. Thats important. Okay. Lets take a vote quickly. Hold on. Move onto the other value trade or traps do we buy ge here . Raise your hands well, ill say it this way. No. Because i like to buy other peoples problems. As an investor, thats a great place to be. Right now this is somebody elses problem yo youre the only one here . I dont own it. Yes, i would buy it. No and no. I think theres further down side. But ahead of the earnings if b. K. Wanted to buy it, hed do it with options. All right ge, as we mentioned, not the only wellknown name in the gutter check out viacom at the lowest level since september 2009 macys down a whopping 43 this year are these names deep value stocks or value traps. I go to the Value Investor what do you say, karen these, this applies to ge as well, you have to remember, the stocks are down a lot. Theyre trading cheap prices however, both viacom and macys have a significant amount of debt so you have to look at the overall enterprise value which hasnt come down nearly as much. I know you can say macys has real estate assets, theyve had them for a long time theyve been very slow to monetize thats been disappointing to me how theyre supposed to be so much value there do you remember there was the activist who they said theres the whole company just that value in real estate alone. Is greater than yeah. So that doesnt seem to be here macys to me, i wouldnt touch it here just because i think they still are trying to get a handle on the model and the debt. Buyer of other peoples problems, and macys let me go first to viacom its my problem. Im long this. Im long every night i got home. Somewhere low 4 handle high 3s, low 4s. And theyve got high affiliate fees at a time when theyre getting pressed into the high priced bhundleundles the five core franchises are still valued im not doing anything with this position but clearly this is the case where the former multiple Means Nothing now. With macys, i think youre at a place where this is a neutral stock at worse with a company thats done some pretty good things to fight the secular trends that are facing their industry to me, even if you put this at a neutral valuation which is five times ebida, youre at probably a 24 stock which is something i can own here with that dividend, thats amazing. 7. 4 on macys. Tim can have that problem im in a break it up move. I tried viacom macys, i dont want it. Its all yours. Broke back. Viacom, i think theyve downgraded saying maybe charter now cuts back on distribution. None of these are good things. You know, ive tried to make an argument for viacom on valuation. They have 12 or so of debt sitting on the 10 billion market cap it makes it on board. Theyre all in industries that are under significant duress you think about retail and think about it in the viacom space to me, macys is the case. If youre looking at the stock today, you have to understand this is a world class franchise, world class brand. They have real estate option optionality. The question is, i look at macys and compare it to a best buy. At some point in time one of these retailers are going to be the last one standing and theyre going to figure it out im not sure macys is that one yet. I dont know who its going to be we know its deer i dont remember rating. Maybe macys will. I think theres more down side on that. Coming up, amazon has shattered the retail sector. Now it has another industry its about to disrupt we have the stock investors are running at the market is facing the biggest hurdle of the year earnings season, which sectors are going to pave the way ahead and which one will stump investors. Later, since guy adami picked this stock it is up more than, get this, 65 . That a boy. If you missed that call, epp t worry, guy is going to st uto the plate with a brand new stock he says is a screaming buy right here much more fast money still ahead. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. Welcome back to fast money. Walmart soaring 2 today the best performing dow stock. The stock is on a bit of a tear up 23 from the 2017 lows. The Company Getting the Royal Treatment in barrons this weekend. Ecommerce grows as it keeps up with amazon. The retail giant announced a new faster return policy for the online shoppers. This move coming ahead of the analysts day tomorrow do you keep betting on walmart, tim . No, i dont think so. Talk about secular issues and competitive threats to me that are obscenely intense. I mean, ive got lydals. Aldis. Theres two german chains weve got plenty of british chains on top of target, costco. You name it, theres an enormous amount of price pressure in this place. Amazon, its a trillion dollar Consumables Market theyre all fighting for i appreciate the fact that walmart has done some good things to price the decay. I think they will do that. Walmart competes on price. That means no margins. That means nobody has any margins. This actually is a name in retail that i have been in and will continue to be in because theyre actually figuring it out. Maybe it works, maybe it doesnt, but theyve got a strategy here, right theyre actually making proactive things with their company. 30 second return i dont know if thats great, but theyre doing something. All of these other retailers are sitting there flat footed while walmart is eating their lunch. To me, i think you stay with walmart. Karen im afraid of the whole space. All of them, they are the most aggressive ive been surprised. Two to three years ago, incredibly stodgy, flat footed as you say theyre not. I have reservations about jets as a grade acquisition. Really . Yes i dont think its great do you use jets . Weve tried it it comes in eight different boxes. Thats what amazon does. Broken. But it seems they dont seem to have a handle on it. Lets say they over pay for it it still gives them that online infrastructure. They can fix something. This becomes like a Grocery Store buying a food kit, you know, retail reach just so they can actually transform that into a business that they dont have. You make it sound they have a business. This is a massive, massive change in their core business. Jet doesnt do anything. Yet is not alibaba. It gives them an ecommerce infrastructure i will admit, maybe this over paid for it. At least they have the ecommerce infrastructure that nobody else in the retail space has. They are the only ones that can feasibly compete with amazon why wouldnt they be the beneficiary of that . Last week we saw wage growth that has been nonexistent. What you attribute it to, im not sure if that becomes a trend one has to argue in a tightening job market is it going to affect the margins of a walmart and target where they have to pay people more money to get them working in their shops that to me is slightly worrisome. I dont know if its necessarily now but its something to take into consideration. On the other side, people have more money to spend. I think thats important. Can i ask one question . Yes, you may ask a question. Thanks, mel. Should walmart be trading at a premium multiple to its 5, 10, 20 year history in an environment that has never been more competitive yeah. Yeah. You know this. It should be. Different than its a Different Company than it is five or ten years ago so it should have a different multiple. I think the amazon threat is a negative from five or seven years ago. Absolutely. So competitive threat. This multiple dosing. All right walmart may be teaming up with amazon or maybe not, these stocks are check out these names getting crushed again today. Express scripts, rite aid, cvs all falling this on worries that amazon is considering a major move into the drug space karen, youre short . Im short express scripts doesnt seem to matter to me, theres a few things going on clearly amazon coming into your space is not a good thing. We dont know if that would happen if thats going to happen, but its a big threat. The other thing is, even before this amazon stuff surfaced, remember, this is an industry that is under tremendous pressure so, i mean, weve seen any industry that operates like they did with the amount of transparency, i. E. , none, thats a problem because were starting to see Companies Really push back you had that very big lawsuit with anthem which is still not settled yet where anthem is saying you guys were making so much money on us, were taking our discounts, even if they settle or come to some deal which i see them doing, they probably lost the anthem business seems likely they have one tiny shot maybe of getting it back. Thats huge. Thats a big infrastructure exit infrastructure they have for that business. But also for their other business, i think they have to be more competitive. And were going to see drug price pressure, and thats not good for them. Yes in november we had a similar conversation in november we talked about big cap pharma we said instead of focusing on the pfizers, mercks, focus on the pbms look where express scripts was in november, look where it is now and look what theyre up against. Unless you think amazon is going to buy one of these groups, which i have they could do it, i think they are in definite dire straits in terms of being disrupted and that is an industry where amazon looks where the margins are. Guess what, to karens points, thats where the margins are. I think big cap pharma is the one place one of the few sectors that has defendable valuations and as we said here on the desk, they havent really been the problem they have not been the source of the gouging and they are probably a place where maybe the pressure from sentiment perspective is too high. Big cap pharma is not something that can beat amazon necessarily. Think about the Business Strategy for amazon. All theyre trying to do is remove the middleman i think its more difficult to remove the middleman from a drug Production Company versus a Drug Distribution company. Still ahead, the pressure is bigging for espn as it suspends the anchor in the Trump Administration is the war between the president and the network just beginning im melissa lee, youre watching cnbc heres what else is coming up on fast. Its the biggest hurdle to the rally. So big were showing actual hurdles. Talking about earnings theyre just around the corner, and weve got the one sector that traders are buying heading into the event. Plus, guys bringing the heat pitching one semi stock thats up 35 this year, and you wont believe how much higher he sees it going. The name when fast money returns. Ient prenatal care. And administrative paperwork, your days of drowning people are numbered. Same goes for you, budget overruns. And rising costs, wipe that smile off your face. Were coming for you too. At optum, were partnering across the Health System to tackle its biggest challenges. Im living that yacht life, life, life at optum, were partnering across the Health System top speed fifty knots life on the caribbean seas its a champagne and models potpourri on my yacht made of cuban mahogany, gany, gany, gany watch this dont get mad bell mnemonic get e trade and get invested welcome back to fast money. Its that time again earnings season. With the market in record highs. This could be the most important one in years bob miss san any pisani is at t q3 begins thursday when big banks like jpmorgan and citigroup will be reporting. Were looking for Earnings Growth of 4. 9 pers percent for the third quarter. Thats a bit below the 15 and 12 growth in the first and second quarters. Its still growth. The biggest growth is coming from energy and Technology Stocks no surprise there. Two points to bear in mind first, the big contribution to tech is coming from the semiconductors well see earnings gains of 27 for that group a loeclone and t 135 growth, its not as amazing as it looks. Energy is 70 . The earnings contribution is small even if the number itself, the percentage looks big were also getting more modest contributions from industrials, materials and health care. Theres your reflation trade financials will have a negative contribution thats only because earnings from the Insurance Companies will be way down, down 86 thats because of the hurricanes thats expected to reverse in the Fourth Quarter heres the issue, are we at peak Earnings Growth . Thats the question. Its not likely. You can thank a Global Economy thats continuing to grow and renewed prospects for tax cuts weve had strong growth for the last three quarters and weve slowed down a bit this quarter were expecting good results in the Fourth Quarter 12 , big gains again from energy and technology and also energy and industrials and materials. Theres the reflation rate weve already started earnings season 23 companies from the s p 500 have already reported. 87 have beat expectations thats well above 64 we usually get. Thats according to thompson reuters. This has been happening recently earnings, 6. 3 above estimates and thats above the 3. 1 average. Double that. So the early results have been encouraging. Remember, none of this includes anything from tax cuts nobodys modeled that in for 2018 and thats another likely boost for earnings back to you, melissa. All right bob, thank you bob pisani from the nyse lets bring in tony dwyer. Good to see you again. Good to see you, melissa. Youre a bull in general in the s p 500. You see 2800 thats the context here. In terms of what were going to see from earnings season, will it confirm, for instance, the onemonth swings bob pointed out in reflation trades weve seen its definitely beginning to do that. Thats for the life of me, which i have said in the last couple of shows, i dont get how people have not raised their numbers for next year based on all the headwinds that have become tailwinds. The earnings, im listening to bob. The market doesnt correlate to the rate of change of earnings it correlates to the direction of earnings. You need to have significant and sustainable drop in earnings, actual earnings to go negative for the market that only happens in a recess n recession. Were at least a couple of years away from that you can have a peak, a correction, but the peak, quote, unquote, doesnt come for at least another year, year and a half after the curve is inverted. Are there certain sectors youre thinking of in terms of areas where they havent raised their numbers as much as they should have and so therefore it could see some up side surprise on earnings season. The banks, its interesting because you look at minus 6 the banks are doing pretty well but, again, its the insurance company. So i said if i took it away from the crazy academic world of wall street you produce a product. Make 100 basis points on that product and now you make 50 basis points on that product as a business owner, what are you going to do . Youre going to produce more product. What do you think banks do they produce more stock and they get the Net Interest Margin bump so the big misperception on the street of dreams is that banks do poorly when the yield curve is flattening. Credit accelerates and over the last two credit cycles when the yield curve goes from 100 basis points initially, which it did in june, to an actual inversion, your two sectors that outperformed in both periods were the financials and the Information Technology lets go into that then sure. We have a Federal Reserve thats going to be raising rates. Yes. We have pmis around the world that are really good. They are. Were talking about Earnings Growth why would you buy the banks when youre talking about a steep yield curve. No. Again, thats one of those common misperceptions. Do better no matter what . No, no, no, no, no. The understanding is because inflation goes up or expectations go up that the ten year goes up but if the fed is increasing Interest Rates pretty increasingly because the data is better, thats something that lowers longterm Inflation Expectations thats how the curve inverts the ten year stays flat and comes down a little bit because the fed by raising rates are restricting growth theyre not enhancing growth so if you really think the ten year is going up a yield, you should be betting they dont do anything because that is a stimulative long term inflationary move. How about when the prices didnt drop but theyve gone up 20, 30, 40, 50 , materials what part of that play do you like the most . Right now i think weve talked a little bit about this outside of the desk is i think youre going to get a little bit of an aversion here. The dollar was so weak i think youre getting a little bit of a dollar bounce, commodity correction once that happens i think you want to go with a quote, unquote, pro growth trade which is banks, industrials. If you take ge out of the industrials because its such a big weighting, theyve done pretty well. The rest of them have done pretty well. Materials and even some energy im looking to buy some tech on a little bit of weakness. Forget about the fed yield curve flattening, recession two years away what derails this . Fed goes 50 basis points. At once yes, at once. Theyre probably going to do it, karen, because rather than looking at coinflation, you can look at the break even 1kz k helicopter ben comes in. Its not whos the fed governor. Its what the inflation regulations are doing and thats what derales it. Something that can derail the markets is unlikely to happen . Totally totally. Im listening today. A lot of folks are talking about how the fed manipulates the curve. Really they do it every cycle and then they ease too much Alan Greenspan said at one point youll never see 3 again. I dont know if he meant on the up side. He meant on the down side. So the fed always over stimulates and then it takes lag in the data and then they have to over tighten. The ten year stays there in the invert and you shut down credit. You cannot fix credit with credit its goings to end badly. Tony, thank you thank you guys. Thats always ominous this is that awful its pretty good. I cant agree more on financials they agree more on record profits. I still think that the materials trade is very interesting. A lot of these guys have run their businesses very different for the last few quarters. Im talking about integrated miners, steel companies. We have citi and jpmorgan, two of your Companies Reporting this week. Thursday, i think i mean, i dont like it when they run up into earnings, the bar is higher, but this is not a quarter thats going to be critically important you know, i dont expect a lot i dont expect something outside vastly outside of what analysts are looking for. Remember, buy backs have started so thats good a little improvement to earnings. So weve talked a lot about the equity risk premium. The price you pay for stocks based on where the ten year yield is going tony is right. He makes a very good argument. Then you talking about multiple expansion, the pe on the s p could get a lot higher from here as long as we have those low Interest Rates. Still ahead, problems for espn growing as it suspends one of its anchors for tweeting about the nfl protests could this add to the growing list of woes for the worldwide leader in sports well bring you the latest. Plus, guy getting ready to serve up what he is calling his best fast pitch yet. Wow. Well explain whats got him pounding the table much more fast money right after this are you ok . What happened . Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac welcome back to fast money. Espn suspending one of its sportscenter hosts earlier claiming that her recent tweets constituted inappropriate social media use. Julia boorstin is here. Hey, jemele hill has been suspended after weighing in on Dallas Cowboys owner jerry jones saying he would bench players who disrespected the flag. This play always work change happens when advertisers are impacted if you feel strongly about j. J. s statement, boycott his advertisers. She then tweeted that she was not advocating for an nfl boycott. It is worth noting that some Dallas Cowboys sponsors are espn sponsors espn said it was about the social media guidelines. Jemele hill has been suspended for two weeks for a second violation of our social media guidelines she previously acknowledged letting her colleagues and company down with an impulsive tweet. In the aftermath, all employees were reminded of how individual tweets may reflect he negatively on espn. This was after two weeks ago hill tweeted that President Trump was a white supremacist. Last week disney ceo bob iger told me why espn chose not to suspend hill after that tweet storm. We have employees that feel a need to speak out, particularly black employees who are angered by what they see societally and with prejudice or racism or rights that they feel were hard fought we have to take that into account. We have to be empathetic we have to understand that with that anger comes a need to speak out. Reporter its worth noting that hills coanchor mike smith is planning to sit out tonights sportscenter. A decision that is reportedly mutual he is expected back tomorrow night. Julia boorstin in los angeles. You know, the question here is could this be a bigger problem for disney i mean, with the pressure of these nfl protests, people may be turning off the channel weve seen some ratings fluctuation up and down. I would suggest this is not peak espn. We are probably trough espn. Im not certain how trough in terms of . This is the question though, guy. In terms of its meaning to disney the company. Less than 20 of disneys earnings. So what this will do to disney stock it did not trade well. Traded up to 101, closed at 99. 5, clearly something is going on i would submit, i dont think President Trump will go after disney is about as american a company as you get i would be hardpressed to believe he would start to go after espn effectively going after the walt disney company. I think its somewhat overstated with that said, i still think disney valuation wise is too expensive. If anything though, i mean, you know, what espn has done is going to make President Trump happy. You know, so theyve essentially, you know, muzzled i disagree. Theyve sat somebody down whos spoken out who at the end of the day targeted at the white house. Yes, but this is the second im not saying what they should have done, im just saying i could see the Trump Administration saying the first one you let go completely with the mildest, most mild of, you know, dont do that anymore. Right. Now its happened again. Right. Now its a twoweek suspension i can see the white house being very unhappy. Youre saying they want more . Yes. Second offense. Right since its a second offense. I do think this issue more broadly of sports i mean, just i think were changing timmy always talks about i cant believe i dont want to watch sports as much the games are too long. Time consuming. So this is, i think, a secular change. Yeah. Its one more thing that makes it very difficult to value espn or disney, right how do you put this into a model . Its impossible adding onto the fact that people are consuming media and entertainment in a completely different way so it just makes it that much more difficult, whatever your opinion on it one way or the other. As a trade, its just hard to even get around. Still ahead, Energy Stocks have been on fire in the past month and theres something on the horizon that could lift the sector even more weve got those details. Plus, guy adamis going to step up to the plate to pitch a chip stock that is up 35 this year, but he says its got even more room to run hell tell us the name and y e e you are. Wharyou so excited much more fast money after this shes nationally recognized for her compassion and care. He spent decades fighting to give families a second chance. But to help others, they first had to protect themselves. I have afib. Even for a nurse, its complicated. And it puts me at higher risk of stroke. That would be devastating. I had to learn all i could to help protect myself. Once i got the facts, my doctor and i chose xarelto®. Xarelto®. To help keep me protected. Oncedaily xarelto®, a latestgeneration blood thinner. Significantly lowers the risk of stroke in people with afib not caused by a heart valve problem. It has similar effectiveness to warfarin. Xarelto® works differently. Warfarin interferes with at least 6 bloodclotting factors. 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Its important to learn all you can. To help protect yourself from a stroke. Talk to your doctor about xarelto®. Theres more to know™. Welcome back to fast money. Time for the instant replay. A year ago, one year ago guy said Royal Caribbean was going to sail higher i think theres a really good chance we see it towards levels that we last saw last year i think all the bad news is in zikas over blown. Valuations are compelling and theres a huge Growth Opportunity in china Royal Caribbean will get you done rc sales are up a whopping 60 . Its soared to a fresh all time highs. What do you do with this now, guy . The reported earnings at the end of october, the 26th or thereabouts. Valuation is still reasonable despite the move to the up side. All the things that were over blown then are probably over blown now. Hurricanes i mean, people seem to go on their cruises regardless you couldnt get me on one if you paid my fare and paid my familys i aint going because i get sea sick. Youre so closed minded. No, im not closed minded at all. Im nauseous minded. I dont want to be in the barf bag for six days. You dont want i saw poseidon adventure. You feel the waves it continues to rally into earnings. Guys been on fire so why dont you go over to the plasma, guy, and pitch us another one. All right that was a good one, guy. Thank you, karen. Thank you for your attention my pitch, tim, is cy comes out cypress semiconductor. Let us put up some of the reasons why. Theyre in now higher margin businesses for a long time they were in lousy margin businesses. Theyve gotten rid of those. Theyve grown by acquisition theyve made small deals that have helped those margins. Valuation continues to be compelling theyve expanded into the cars and the internet of things for industrial names pretty much great places to be right now. That accounted for almost 50 of their revenue last quarter chips for the Nintendo Switch, dont ask me what the Nintendo Switch is. I dongt know all i know is every cage from age seemingly 9 to 18 has one and is infatuated by it, my kids being some of those. Last one, four straight quarters of Earnings Growth pretty great story if you look at the stock, b. K. Is probably pulling it up on his chart machine now. You will see that were right up against levels that we failed at 2 1 2, 3 years ago huge potential for a double top. I think we blow through it i think at 14 or so times forward earnings its compelling and i think the 10 Short Interest is such that shorts are going to have to cover into their next Earnings Release. Karen has a question. Ive got a question for you. Semis have they found themselves in booms and busts many times is your plan here theres more boom in this and you hang on for a while . I hope so listen, youre 100 correct and if you think this whole this Autonomous Car and integrated cars and the Nintendo Switch, its at the end of the cycle, then by all means the stock is probably expensive if you think internet of things for industrials, if you think this whole sort of move in gm specifically youve seen, if you like what gm is doing and tim has been on board as well, then you almost by definition have to like what the folks at cypress semi are doing will it be a bust at some point . Probably but i think the stock sees north of 20 before that happens. All right so it is time to vote. These guys here waited until the last minute to write on their white boards, which tells me it could be close or we forgot. Or you forgot to vote either way, tim, what do you say . Im going to buy it im going to buy it on the basis of the fact that i think theyre under performing their sector because their margins have been lower and their growth has been higher the sentiment is they continue to be dominant in the internet of things. I have to bet with a guy thats been sea sick on carnival cruises all day long karen yes, im going to buy also. Wow i believe that there is actually more to this. I think were early in the internet of things and, who knows, this is sort of bite sized acquisition for somebody okay. Well, b. K. Did look it up on the chart machine. Called the cork ron machine and it says to sell. Up 25 since september my fear is the risk reward at these levels just dont justify buying it. Two buyers, one seller. Do you out there agree with guy adami. You can head to cnbc fast money on twitter. Well reveal the results at the end of the show. Still ahead, something is happening this week that could send oil soaring you may have missed it dennis is here to llte us what it is and how he is playing it much more fast money straight ahead. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Welcome back to fast money. Crude coming off its worst week in may one key event could lead to a turn around. Lets get to jackie deangelis. Reporter good evening to you, melissa the Trump Administration has one month to certify irans compliance with the nuclear deal agreed to by the Obama Administration in 2013 trump has expressed his views against the deal speculation is that he may act but other member countries appear to be still supportive. If trump doesnt certify Goldman Sachs says the risk to the market is the Million Barrels a day that the iranians putback online after western sanctions were lifted. This is crucial because iranian supply was part of the reason that prices took a substantial leg lower. Now at 50 a barrel crude prices are hinging on this supply demand. Right now there are three reasons that prices should go lower, seasonality, rise in u. S. Production and opec production increases. If the iranian oil came back offline, it could tip the scales the other way. Jackie, thank you jackie deangeles for more lets bring in the commodities king himself Dennis Gartman joining us from Virginia Beach hi, dennis. Hey, mel. What do you think the decertification of the deal could mean for the oil markets would that be a Lasting Impact no, i think it will be very temporary. I think youll see if that were to occur, youd probably get a 3, 4, 5 rally in crude oil. Lets remember, crude oil is fungible are the iranians not going to Sell Crude Oil will they not be able to move it to somebody else of course thats going to happen youll get a very brief, very violent, very ugly rally in crude. Can you get wti much above 55 a barrel i doubt that very seriously. There are so many wells that have been drilled and not completed out here in the United States and fungibility i think it would be very short lived and that would be an enormous amount of hedging going on by producers out in the permean selling crude oil as aggressively as they could if wti got anywhere close to 55. Do you think we back off of 50 jackie outlined three pretty plausible reasons why oil should be headed lower. All things being otherwise equal, if things remain as they are right now, crude oil probably wants to continue to trend downward i watched the term structures and the term structures had turned about a month and a half ago rather bullishly in the course of the last week theyve actually begun to turn bearishly once again i think that the fundamentals argue unless there is something untoward that would happen politically, unless something happened in nigeria, unless something happened in saudi arabia, notice the iranian circumstance was dessert fied. Dennis, thank you good to see you. Thanks for having me on. Dennis gartman of the gartman letter opec has made noise over the last couple of days. They feel their rebalancing efforts are working. Theyre looking to extend those things look at rig counts people who dont know a lot about the industry start falling and tracking the rig counts. Doesnt tell you where were going other than the fact that theyve been flat for the last three months i think the dynamics for rebalanced oil markets are there. I think demand stories are there. Yeah, im long Energy Stocks as well. I think thats the place to be think about what the other kalt catalysts are. Saudi a ram could he, ipo is coming in 2018 they just made a deal with russia they want to support the prices. That is going to Keep Oil Prices relatively high. I wouldnt be surprised to keep the rally past 55 just because nobody is expecting it. Guy exxon mobil now has this 82 lef level. It hasnt performed nearly as well as bp exxon continues to rally which i think is october 27th. So is it still a down trend . Yes. But i do think it has room up to 86. 5, 87. Trans ocean jumping neitherly 2 now 24 in one month mike ko joins us from the action from austin. Mike hi, there yeah, so we saw over two times the average daily options in trans ocean. The stock has rallied sharply and what we saw was a seller of 20 thousand january 9 puts taking the proceeds and buying 10,000 january 11 calls for approximately even money the interesting thing about this trade, basically they dont have any down side risk unless they put the stock down 15 they have up side participation up 5 . They are making a bullish bet that the rally could continue. Thanks for that, mike mike ko in austin for us for more options action check it out friday at 5 30. Up next, there is time to vote on guy adamis vote the stock is up 43 after hours. Well reveal the results next. I think its terrific. Your kids go to college and you start trading. Yeah, 5 years already. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. Ca yes you can can i kick it . Yes you can can i kick it . Yes you can well im gone can i kick it . To all the people who can quest like a tribe does. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise tmobiles unlimited now includes netflix on us. Thats right. Netflix on us. Get 4 unlimited lines for just 40 bucks each. Taxes and fees included. And now netflix included. If they knew just howers rich they were. Ed the average American Home value has increased 40,000 over the last 5 years. But many dont know you can access that money without refinancing or selling your home. 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You guys out there are buying that pitch hes losing on his dancing. Final trade, tim. Macys, we talked about it earlier. Karen the airlines, i think the bottom were seeing good things i like american. B. K. . Even though guy the swammy adami picked cypress, i like nvidia. Feel good huh your victory. Its not about my victory, the victory and our yankees, tim, this evening. Lets do that. End up going down. Dance with a girl you brought to the prom. Cy. Im melissa lee see you back here tomorrow at 5 00 meantime, dont go anywhere, my mission is simple, to make you money im here to level the Playing Field for all investors. Mr. Always a bull market somewhere and i promise to help you find it. Mad money starts now hey im cramer, welcome to mad money, welcome to cram america. Other people want to make friends im just trying to make you money. My job is to ed kuwait you so call me at 1800734cnbc or tweet me jim cramer