Transcripts For CNBC Fast Money 20180125

First we start off with words that moved the markets all over the world. Take a listen. We are doing so well, our country is becoming so kickly strong again, and strong in others ways, too, by the way, that the dollar is going to get stronger and stronger. And ultimately, i want to see a strong dollar. President trump speaking exclusively to cnbcs joe concernan in davos swirtserlands. And the dollar took notice it moved for its largest insupraday move of the year. And the s p 500 at a record high the question here between secretary mnuchin talking down the dollar and President Trump talking it up, is this a risk to the rally . I dont know if it is a risk to the rally i do think they are playing a dangerous game maybe im oldfashioned, but i dont think her sitting president and the treasury secretary shop so pine on the strength or weakness of the dollar historically they havent done it maybe its changing. I dont think they should. Frankly, though, they should get on the same page february of 2017, at 3 00 President Trump called nike Michael Flynn at 3 00 to ask what was better for the economy, a strong or weak dollar. President trump was correct. A weaker dollar is better for multinationals folks at home that want to hear that, that is the truth. And mnuchin is correct but the trade partners and the people who have our deb dont want it and the consumers at home shouldnt want a weaker dollar either. Todays comments are almost worse than yesterdays you would think he would have left well enough enalone then he says sometimes we want a strong dollar, sometimes a weak. I think he should stop talk about dollar there was a sense of people and confidence across the entire administration in other administrations. I dont think this treasury secretary is giving a lot of people confidence. To me, i think the message that President Trump said, President Trump at least tried to do daniel control i think that was smart i think ultimately to get in there and say our economy is chugging along, we are interested in having a strong currency is the right thing to say. Although i dont think hes supposed to be saying that either i think it was the right thing to say after what we had. I think they all say strong dollar. They all say strong dollar policy. I think mnuchin was trying to be a problem solver. You think he was doing okay out there . Which one. Mnuchin i think he was trying to be practical. He was trying to say it doesnt hurt us. He wasnt talking about manipulating it. I think he was talking yesterday about a weak dollar is in your advantage. Is it in our advantage. Dont ask me the question im asking you the question. This is what he was saying. Im asking the question it wasnt like he was member manipulating thats my point. Tim, you would agree that a weaker dollar is beneficial, it is a not beneficial to a portfolio for a lot of us. It is beneficial if you are investing in emerging markets or commodities. Multinationals. To some point but i think there is import price inflation. I think there is a case where if people are going to be buying our dpoods do you think they ultimately lets put it differently. First of all back to the u. S. Treasury they are about the ramp uppis youance, and they are cutting back on bond buying. If you are telling us you are going to let the dollar erode out from under you while you are buying our stuff not good the momentum in emerging markets got to 2004 levels this, r morning. We are way overbought, the dollar was way oversold of the it should have bounced we were at the point where some of this played out i think with month end and whatnot this is where most people are going to take a pause. Karen its unnerving to see the dollar move so much. We are talking before the show, over the last i guess year is it so much that the dollar has weakened or that the other currencies have strengthened i know it ends up being same thing. But was this going to happen he anyway as the rest of the world starts to pick up momentum i dont know about that. Its interesting the me, the volatility index was only a little bit higher at the end of today with a lot of stuff going on in the middle for me in my portfolio im not going to change what i own because of the dollar moving around a lot today i dont love it of it will make me hang on the futures and wait for the vix to go higher before i sell them. The dollar has been going down since december. The market has been going up dollars been going down for a year. Three year low. We are talking about trump now. Just the trump effect. The dollar has been going down the market has been going up so when you say what do you do with your portfolio, everything has seemed to have worked. With the exception of energy until lately so i think you stay the course. You say the course. But if the dollar changes course, doesnt that change how you view the market at all. I think it has to be longer. You made the point that it had been going down since trump and the market going up. I agree with mnuchin. I would like a weaker dollar, not falling out of bed weaker dollar, but i would like a weaker dollar,ity i would not like the dollar the spike higher. The porscheback would be 70 or 72 consumer driven economy, which we are, and this is a hidden tax for the consumers your buying power is eroding away. We run a deficit in this country. I agree with you. You realize while rates are going higher and karen made this point, inflation seems to be trending higher. Its a triple whammy thats not going to hurt the stock market today or a month or two from now. But it has an effect. I understand that do you think we are at a place that the consumer expects the retailer to sort of absorb that . They have no choice. I think the retailers are thinking that the consumer can absorb it. They are doinger with, wages are higher, some are getting bonuses. Coals. The lg price increase, who is absorbing that, home depot i dont know the consumer i dont know neither do i. Thats why you are a smarty i dont know. Protection and trade barriers and all the rhetoric from last week tomorrow we are going to flex muscle and tell the world how tough we are on trade its going to be inflationary, its going to have an impact. At a time when we have been expecting inflation to rear its ugly head. We are at 15 probable of that, 58 probability of free hikes. Are you derisking your portfolio . Yes. What did youdo today. I sold emerging markets which i trade actively and i flattened it out i think emerging markets are going a lot higher but they dont need to go a lot higher when they were as overbrought as they were and the dollar was as oversold as it was. Your next guest says a bull pac is about to happen tony mel, well our theme this year is higher volatility with higher markets. A big part of that is because sentiment has gotten so extreme. Investors intelligence, which has 12 bearsest historically thats a low level of bears. This measures newsletter writers one of the oldest measures of sendment around. You had a 50 run up in the market it caused all the bears to high better nate. When that happens, typically the last time that happened was 1985 into 198 of a 40 move going up here you had a how move coming up into the corrective territory. What happened there when you had 12 , right here you had 12 bears, you had corrections look at these thing. You had twoday corrections followed by ramps to new highs now thats the whole thing here. If pete was here he would say hashtag giddie yup when you get one of these drops you get these ramps back up. They are three day ramps you dont have time to get involved you have got to do them right away. I think we invite tony over, right. 100 . It would be weird if we left him hanging out there. Karen, thank you for bringing the chair in whats up, brother. How are you what do you tell investors to do i have got to tell you there is a push to buy the next tick, you have got to do something, do something. There is a saying that i like to use, dont just do something, sit there. This is one of those times where i think you sit there. I dont think you have to chase the next tick. As we showed on the telestrator, when you get optimism this high and bearishness this low you are going to get a chance to buy them cheaper you feel like you have got to do something. You dont have to do something what i wanted to show on that teleseparator so well, you dont have time to bet the downside because rebound happens too quickly. Just like the dops are two or three days, you get the two or three day ramps. Tony to your point, this is the second longest we have been above the 200day moving average. And the last time that we broke that trend we only had 40 days before it was trading even higher than where it fell off a clip cliff you cant sell them. You cant wait to buy them because you already own everything what do you do, literally sit on your hands i would literally sit on my hand there is no fundamental reason depends on your tame frame. If you are a good enough trader. If you have overweight and into equities cut back to a neutral position if you are overwait in aggressive and high cyclical areas neutralize a little bit when the mark does come in its coming in i believe its coming in then you can add in and releif got aggressive versus chasing here. A passive aggressive dampen activity based than the pull back based on everything you showed us is inevitable but might come in such a muted way that its all relatively benign anyway. Guy, you are almost as old as me. Why did you have to do that why are we doing that on this show. Wait a second, guy, he said you are almost as hold as him. Eh . [ laughter ] there is always a reason. Human nature is only works at extremes like the Investors Intelligence polls. Usually it doesnt many a dap damn thing when you are at a human nature extreme then you can make a better educated guess as to the near term direction. We have hit that extreme with 12 bears. Just like timmy was talking about with the dollar. You are so much above the 50 day emoving average in the eem its likely to pull back historically near term. Certain times there is really identifiable things. We are in one of those times but i think the key to the message is its not a bearish call please, please dont get bearish when you have a positivecally sloped yield curve you never ever want to be negative what you want to do is use weakness to your advantage because it comes back very quickly. Basically as long as the yield curve is the way it is, there is no risk that that small pullback will become something bigger or is there . There is a risk to the passive investment and the High Frequency trading and that kind of thing there is a shot that you could have kind of a market event but it shun be a big event and it should be temp rat you know we have a new specialist at the nyse most specialists were gone. They were the stabilizers in the fast market. Its Corporate America Corporate America buy backs when you get wooshes in the market thats your specialist thats the entity thats there to smooth it out they are doing it for the benefit of their shareholders. I would be remiss if i didnt say there still are. They are still on the floor. Only at nyse, tony tony, thank you. What did you do today, karen . I didnt do a lot. I did sell united and buy delta. Awful day obviously for them both but i would rather be in dealtan than united. Also i bought some manage walk you did. Yes, i did. Why i dont know. I thought the numbers were interesting. They had a nice run. We are going to see numbers shortly. I think there is a reasonable shot we see good news from them. I think people are getting spooked by Home Builders and rising rates ill looking to see if i want to increase my Home Building positions, phm i sold some macys. Sold some yesterday and more today. This wasnt fall in love with the position thats my call on macys. Some of the material stocks might come off a bye if the dollar does rally. Short recovery on the dollar fcx or u. S. Steel, buy that dip. A practicing note. Do not miss joseph currentans interview with President Trump tomorrow morning at 6 00. Intel, Western Digital, starbucks calls coming up. Plus, he is known as the bitcoin oracle for his spot on predicts on where the currency is headed next what does he think now vinny lingham. Well look into his crystal ball. And this tech name is up 15 in 2018 alone and it has one of our traders pounding the table well tell you what it is right after isth break much for fast money straight ahead. whispering excuse me, are you aware of whats happening right now . Were facing 20 billion security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. Can we do that . Ronoh really . Gs going on at schwab. Thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to wealth management. We know life can be hectic. Thats why, at xfinity, weve been working hard to simplify your experiences with us. Now, with instant text and email updates, youll always be up to date. You can easily add premium channels, so you dont miss your favorite show. And with just a single word, find all the answers youre looking for because getting what you need should be simple, fast, and easy. Download the xfinity my account app or go online today. Welcome back to fast money. Allibaba is breaking out. The chinese tech giant jumping 15 so far in 2018 after reports of emerging talks between alley and kroger just like amazons act wi decision of whole foods last year will that move take the stock to new heights. Init is a catalyst for a name that has a couple of catalysts out there. I think they are going to show in that Second Quarter they grew 50 . This kroger deal, you can follow the same playbook as amazon. Ultimately what you are seeing in the entire ecommerce space in china is off the charts vips, jd they have been booming and the technical break up. I dont understand why they would want to acquire or partner with a u. S. Based Grocery Store if the whole thing is a china consumer. Its not. Alibaba right now is a global company. T mall what they are geared towards is international mchtsd. I think at minimum they are trying to place and plant a flag globally maybe not in the United States im not sure this is a big thing for them but its establishing this as a brand and an International Brand at a time when they are growing dramatically outside of china. Thats a big part of their business. I think they have been trying to really present experiences in brick and mortar this is something where ialway equate it to it is amazon 2. 0. If you missed amazon, it is your way of grabbing this they are following the same exact playbook to the t, thats why its still a buy and why i still own it. Kroger as talking, in june when the stock went from 32 down to 22 it went sideways, maybe down to 20. 5 but we talked about how cheap it was relative to its peers. It has balanced a lot of it on the back of this then you have to ask yourself, have you been in kroger,set getting expensive . The answer is yes. They are still on a down trend and they are head winds. In my world, if you enjoyed the rally i think you take some profits. It doesnt make sense to me intuitively if if they were to try to do that why not go after Something Like a target that is broader than groceries. They have a presence here in terms of exporting or bringing u. S. Products to china i dont see it selling thing here. I dont think this is a core Strategic Alliance for them. Yeah. I look at company and i think the most important thing for alibaba right now, sentiment has changed. People believe their numbers, believe in jack ma, in the element of the companies they are spinning off they believe in the fast money, which you buy at the all time highs another fast money question would you rather, alibaba or ten cent i think here alibaba has more room to run. It is a technical call it has been mostly sideways. Ten cent has been. Booing i think its more of a pan tech play in asia if you want to buy one of them thats the better one to play. But alibaba of late. Im long alibaba. The prime targets across the street are its magnitized to 2106789 i think its going to go above that and its going to be a stock thats 3 or 400 in the next three years. Starbucks is getting crushed. What went wrong with the quarter . We will hear from the ceo later this hour. Im melissa lee. You are watching cnbc. Heres whats coming up. A Top Hedge Fund says pass on grass. We will tell you which stock that fun is betting will fall. And vinny lingham, the bitcoin oracle talks about bitcoin and what to do with your coins when fast money returns. Your brain changes as you get older. But prevagen helps your brain with an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Welcome back to fast money. Crypto regulation a hot topic at the World Economic forum in davos this week. This is the price of downtown. They have nailed near that 11,000 level, or as we like to call it, bitcoin purgatory seema mody has more. It is bitcoin is catching the attention of some of the most powerful names in the world of finance. Steven mnuchin and la guardia both said they were focus on cryptocurrencies and regulations. We want to make sure they are not used for illicit activity. In the United States, our regulation, if you are a Bitcoin Wallet you are subject to the same regulations as a bank. I totally agree withwhat steven was saying about the fact that the anone imity, the lack of transparency and the way it conceals and protects money laundering, and dark trades is unacceptable. Black rocks Ceo Larry Fink said while there are risks Blockchain Technology is real and cryptocurrencies should not be dismissed. It has created a fascination with millions and millions of people its real. Its going to transform how we do our business. And we should not turn our back to it. We should embrace it and work toward a global solution. A coordinated global approach to regulating cryptocurrencies will likely be the central focus for Government Agencies in the coming month china and south korea announced they are cracking down on cryptos and banning icos, the u. S. Has slow to regulate the new market although jay clayton has been vocal, issuing a warning on cryptocurrencies and writing last night that ts. E. C. Is devoting resources to the Coin Offering market. For more on what the crypto crackdown could mean for bitcoin lets bring in civic ceo and shark tank south africa host vinny lingham. You have been dubbed the bitcoin oracle because of his spot on predictions in the past. Good to have you on fast money. Thank you increased regulation at the least is coming. What will the impact be on cryptocurrencies will it affect all coins in the same way across the board . Yes, i think what is happening is in the developing markets around the world where regulations havent been as well enforced as in the u. S. We are seeing that the growth in crypto in these emerging markets has really forced governments to take a closer look at what is happening a the local exchanges. Now in the u. S. , coin based, et cetera, they have been doing kyc and regulations for years. So its very familiar territory in the United States but in emerging markets where a year ago, 18 months ago, you know, bitcoin and cryptocurrencies, no one even knew what they were. Now they are having to cope with millions of people coming on line and trying to buy the cryptos. And the regulations and exchanges havent really been enforcing antimoney laundering and id verification kyc for your customers. Know your customers is kyc. As this crackdown happens around the world vinny does that put a cap or a ceiling on how prices can get in 2018. I think on retail side, Retail Investors, you know, we have seen exchanges like bit rates, et cetera, have to literally close because they had hundreds of thousands of people signing up within 24 hours et cetera. I think the Retail Investors are going to have to wait in line while they get id verified and kyc posters going through these exchanges. But the Institutional Investors in the sovereign world funds dont have these restrictions. If they want to do a large buy of 5 or 10 million they can get verified quickly through the exchanges and still make those buys to some extent it will impact the Retail Market as it grows, but the Institutional Markets will be okay. You think bitcoin cash is undervalued. How do you come with that sort of analysis in terms of valuation. Personally when i look at bitcoin versus bitcoin cash ive written about this. Bitcoin and bitcoin cash are actually, they are focusing on totally different markets right now. These two products are serving different needs in the market. The one need is global, fast cheap payments with some tradeoffs and the other need is antifiat central position money where everybody can run and load to monitor and value their own transactions when i look at it from a product standpoint inthe greater demand is for peer to peer cash than for digital gold but you know, this is something which we will not be certain of until a couple of years as this plays out. You dont own it sounds like you dont own some of the privacy coins like a z cash or mow narrow what do you think is in the pipeline for them in terms of regulation if regulators are concerned about the use of cryptocurrencies in criminal activities do you think privacy coins might face harsher regulations or a harsher spotlight than some of the others you know, in some ways they should but, again, this is crypto its really hard to clamp down on this because its very easy for bitcoin, bitcoin cash and any crypto to become a privacy coin as well so where does it start, where does it end. Money arrow and z cash are front runners in that race but i dont think its something you can really start. Vinny, we have got to play a little buy, sell or hodle bitcoin . Hodl for me. Bitcoin car, buy, sell or hodl buy. Buy okay great. And ethereum, buy, sell, or hodl hodl. Last round. Light coin, buy, sell, or hodl. Sell. Sell . Is that charliely sold his position i mean. Partially. When the founder sells, i mean thats not a positive sign. Recollect, you should d wrecu should do wrecked for that. He sold but i dont see the differentiation between light coin and bitcoin it is the same Technology Just mined with a different algorithm, thats all. I have never been very excited about light coin itself. All right are there any other alt coins out there vinny that you sort of are looking at, interest you, you think could be the next in your top three or four yeah. Yeah you know, i have definitely looked at zrx. Zero x, its technology for decentralized exchange protocols. This is interesting because if the government regulations do come in and they become too harsh in some countries decentralized exchanges wine of taking the place of centralized exchanges because with the decentralized he can change there is no control by any government it is an interesting concept because you can use smart contracts to Exchange Coins and cryptos. Decentralized is big at the moment, but i think it becomes a big trend later on this year as we see more regulations coming in. Vinny, it is been a pleasure. Thanks for your time we hope you will come back to fast money soon. Thank you. Vinny lingham, who is known also as bitcoin oracle, giving us a little buy, sell, hodl. Regulation equals validation here is what it sounds like. And centralized versus decentralized. I think people may think they are opposes theories or concepts, but i think if the regulators want you to be centralized you are going to be centralized. People who say you cant shut down the internet, man i dont believe that i think the regulators can control how this needs to be controlled that doesnt mean the concept of decentralization in terms of peer to peer cash, et cetera isnt alive and thats why we are doing this. Karen. A lot of new money is come into the space. Still. Till. Even despite the purgatory and the scary music that we play. Despite the music and with the revery volatile markets we have seen. Even for cryptocurrencies, volatile, ma, i think that is going to be a significant factor. Bk was in switzerland at a crypto conference. He is saying there is institutionals stepping in it has been a Global Market i will leave it to guys like tim and bk to figure that out. I like the blockchain. I think regardless of where the individual coins go, blockchain is not going aaway i dont have stock and square is how im playing it Morgan Stanley raised numbers. 22 Short Interest if you are looking for a beta play on the back of ethereum, amd is the thing a quick question to you. Yeah. If this bitcoin craze was so amazing. Bk, where was he. Switzerland what did he bring. This is what he brought for all of us. Its almost insulting get a close up. For scale, lets sigh, here a bottle of water and the to be letter own, so you can get a concept of the size of the ca y candy. Maybe he had a bad week on his bitcoin stock. Its overrated. How about nestle krurch, hersheys make american chocolate great again. From our crypto crackdown to a pot bust, one Hedge Fund Manager is shorting one stock in the space. After, that we are Monitoring Company conference calls. Much more fast money right after this we have a short amount of time to get our patient to the hospital with good results. We call that the golden hour. Evaluating patients remotely is where i think we have a potential to make a difference. barry murrey we would save a lot of lives if we could bring the doctor to the patient. Verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. As we get faster wireless connections, itll be possible to be able to operate on a patient in a way that was just not possible before. When i move my hand, the robot on the other side will mimic the movement, with almost no delay. Who knew a scalpel could work thousands of miles away . Welcome back to fast money. Intel and Western Digital reporting earnings after the bell cue the magnum pi. If you are a josh lipton fan, we are giving you a double dose of josh two beards he is breaking down the after hours action in the blue chip stocks take it away. I feel like somewhere tom selleck is listening and wincing at that comparison i apologize to mr. Celek lets get to intel results outstanding. Top of mine meltdown inspector, the vulnerability, the security flaws exposed earlier this monday the ceo addressing that at the top of the call. Listen. We have been working around the clock with our customers and partners to address the security vulnerabilities known as specter and meltdown we have made progress but we have more to do. We are committed to being transparent keeping our customers and owners appraised of our progress and through our action, Building Trust security is a top priority for sbrel. Remember, sbrel executives said they dont expect any kind of material Financial Impact from those vuler in bltsd. Ceo now saying they are focused on delivering high quality mitigation, patches to address those flaws. For the Business Units they focus on Data Center Group revenue, up 20 to a record 5. 6 billion. Better than expected talked about broadband advanced strength, a richer asp mix chips for pcs that clocked in at 9 billion down 2 but better than expected for more on intels results, check in tomorrow to squawk alley. That is when jon fortt is going to be speaking to intels cfo bob swan dont want to miss that. Quickly, touching on Western Digital moving in the opposite direction here that stock was up 10 year to date heading into this report. Down 6 over the past six months Western Digital, a solid b on the bottom line beat on the bottom line. Bit of a beat on the top investors clearly disaount pointed the ceo talking in a statement about the strong operating cash flow. He talked about continued healthy demand in their end markets. Ditz appointment there First Quarter we are hearing from Western Digital since they ended the nasty legal fight with toshiba. That call is starting right now. Backs to you. Thank you josh lipton in san francisco. Guy, your report intel is the report we talked about this at the beginning of the month it was unanimous across the desk the sell off off of that announcement was probably overdone talk aboutet going in front of a story. He did a good job. They had some flaws but did a good job they were right up front about it and this report proves the selloff was overdone i think its going to continue to rally off of this report. There was an adverse relationship between amd and intel. And then when the ceo of intel got on and said this is ubiquitous through the whole entire space everyone is going to have the Security Breaches and whatnot Going Forward then you saw them start to work basically in the same direction. I think the strong report out of intel, the bar was low and they crossed over it. Thats going to be strength for amd. And the other side of it, wdc, that one is going to be weak Going Forward. I think you will see the inverse correlation with the two names. Cross over a little bit to apple, related in the chip space but apple had a rough week its down 4 thisseck would. Lots of concerns about the blockchain. Blockchain and the data that they are getting from the chip suppliers, et cetera, karen, what do you think of this decline . I dont know. Everybody seems to be concerned. I can buy into that. It cant be bad for the apple story, right. Right. This kind of performance. But across the birdie it cant be bad but i dont know if it would be enough to overcome. To allay the fear. If they do miss dramatically. When sammy reported what they did i would listen to them they are seeing dma. Inventory bad is not bad for the sector thats better than last year i stay long. Coming up, starbucks burning investors, the stock is down more than 4 we will here from Kevin Johnson later this hour. Plus just say no. Thats one what Hedge Fund Investor is telling investors about high finlyg pot stocks we will tell you what has him so paranoid about the space when fast money returns. You always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Like you do sometimes, grandpa . And puffed. Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. If you cant afford your medication, astrazeneca may be able to help. Welcome back to fast money. Pot stocks have been on fire but one Major Hedge Fund is not high on the group. Leslie joins us here on set with more. It is a 5 billion hedge fund not too high on marijuana stocks these days liquid Capital Management revealing short positions in canedy growth and Aurora Cannabis the founder telling investors in a letter obtained by cnbc quote we understand its not a matter of if but when she is stock prices collapse. Otherwise we should all be moving to canada and growing pot. The basist of the thesis is this, zpooit despite the recent excitement the mania surrounding legalized recreational po of the in california neither of those companies can sell into california or anywhere else in the u. S. That is still illegal. He points out it is really cheap and easy to get canopy and auroras production up that they are not actually making that much pot and the barriers to entry, the competitors are popping up by the way. It is a easy to get in both canopy and aurora traded lower today. Canopy didnt respond to our requests for comment but aurora told me quote he would dont worry too much on shorts on u. S. And other companies in the sector have been forced to cover repeated repeatedly the firm has 5 billion in assets and posted returns of 8. 3 last year the firm also disclosed a long position in bmw and a short in a korean pharmaceutical company. I have got a lot of questions about this i would any that the companies being this canada is actually a strength in this sector because there is no legal risk from Jeff Sessions doing something in the United States, that its built on a Regulatory Framework that already has pot legal. Well, hes saying that people are looking at the u. S and the potential market here, as a Growth Opportunity for the marijuana companies. So thats in the valuation now . Hes saying thats essentially priced in, especially california. People see that as a huge opportunity. And all the media buzz, i guess for lack of a better word surrounding california and legalization is something that people has brought Retail Investors into that stock and drove it higher. He does not believe thats a necessity and that that should not be what was your fast pitch company company. Med relief. They have 18 of the market in canada its based on medical. Good for med relief doing their work stock by stock. This is not an indictment of the Marijuana Industry they are pointing out companies that they think are under three from bigger players to step in this is not im going to quote somebody from the conference i was at tuesday in miami, a cannabis conference this is not about the green wave this is a marathon to take a bite out of alcohol. Thats what this is, its about efficacy in pain relief and in wellness to me this is a 400 billion market right now globally and obviously, california and the u. S. Are going to be the leaders of it. Cana canada, whats going on right now. Valuations because canada is fully legal on the medical side. They are about to go fully legal on recreational. The Ontario Liquor and now cannabis control board is the largest buy he of marijuana in the world and med relief sells to them. I think the guys with the headstart are the ones with they are going to be a bigger headstart in the future. What do you make of his point of competitors in the state and barriers to agree are low to grow pot sp produce it i think scale certainly matters. What we are seeing and the reason i like med relief, it is cash flow positive and best on excoug and they really careabout the execution. I think they guys truly run a sound operation. But big 1,000 question for the marijuana or the Cannabis Industries is what happens in terms of supply response to more people coming on line. Naturally, in any commodity the more you see the more it pushes down prices. Maybe the prices we see today around the same as tomorrow. Still ahead, starbucks sinking after hours afteris earnin rorgsept. We will hear from its ceo in just a few moments more fast money still ahead. Oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. And four times less than vanguard. Whats next, no minimums . No minimums. Schwab has lowered the cost of investing again. Introducing the lowest cost index funds in the industry with no minimums. I bet theyre calling about the schwab news. Schwab. A modern approach to wealth management. We know life can be hectic. Thats why, at xfinity, weve been working hard to simplify your experiences with us. Now, with instant text and email updates, youll always be up to date. You can easily add premium channels, so you dont miss your favorite show. And with just a single word, find all the answers youre looking for because getting what you need should be simple, fast, and easy. Download the xfinity my account app or go online today. Welcome back to fast money. Starbucks Earnings Call just about wrapping up. That stock is down this the afterhours session. Lets go to kate rogers with if details. Beating on eps but missing on revenue. In china same store sales increased. Thats an important metric which opens its first reserve grocery in shanghai. They said customers line up for hours to shop at the high end store. China is now their second largest market in the world and johnson says he has no doubt it whether surpass the u. S. In terms of the number of stores it has there one day. China was our Fastest Growing market in q 1, 6 comp growth driven entirely by transactions and 30 Revenue Growth customer cons response to our shanghai rose street has been extraordinary. And its already performing well above expectation. Mobile is another important growth area for starbucks, which added 1. 4 million active starbucks reward members during the quarter. They also raised full guidance and said nongap tax rate will be 23 in 2018 the ceo Kevin Johnson will be on cnbcs squawk on the street tomorrow atk a. M. Eastern to break all of this down be sure to tune this. Guy valuations. People look at valuations, saying comps werent great i hert what kate and mr. Johnson said but if you par through it. Comps where not where they should be. What do we see first i think we see sub55 then maybe takeanother dip at starbucks. In the coffee space, i would pick dunkin. But i think the tail win is going to be their effective rate is middle 30 i think you are going to see that become an incredible tail wind really. Looking at the tape what they said is they are effective tax rate not their net. Their effective tax rate will be 26 , seven Percentage Points less than their previous guidance i think thats positive. I think the starbucks story is one that every time they report i feel like this stock does this and every time it is an opportunity. Stock has done largely nothing over the last two years. I think they are executing and kevin gianson, thats his forte as the ceo they are glowing globally. Multisales channel im long in the name this does not bother me. 700 stores open gloebldly in the First Quarter. Staggering. There is two on this block. Yeah, exactly. It is crazy i guess there is more to saturate out there. Right sticking with our earnings here, mcdonalds reporting next week the option market implying big moves for golden arches. Lets go to mike khouw in austin texas. I didnt know you were that big of a fan of the big mac. From chinese food to mcdonalds. I am a healthy eater, its clear. [ laughter ] so, its interesting, mcdonald obviously they have been trying to make some important changes i think with the refranchising skpeft the sga expense cuts. It is not a name that typically moves that much. Usually moving 2. 5 on earnings. Even though we are seeing moves that are smaller an average, in mcdonald the move they are answering is 3 . Larger than we would normally expect however i would point out over the cost of the last month or so more calls than puts have been trading. Also true today. Seems like the Options Markets remain tepidly bullish. Are you a dollar menu kind of guy or a happy meal sort of fellow. Of course he is a happy meal guy. I actually [ laughter ] for the kids, sure im sure they love that im more of a pea terrys, shake shack, five ties. How about the mcshamrock shake on st. Pattys. We can go on and on mike, we will see you tomorrow at 5 30 p. M. Up next, a special fast money announcement, and the final trade. See thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade hi, im mindy kearns. Its greatnice to meet you too. Your parents have been talking about you for years. Sorry about that. Theyre all about me saving for a house, or starting a college fund for my son. Actually, i want to know what youre thinking. Have a seat. Yeah. Knowing that the most important goals are yours. With 15,000 financial advisors, its a big deal. And its how edward jones makes sense of investing. The great emperor trekking a hundred miles inland to their breeding grounds. Except for these two fellows. This time next year, were gonna be sitting on an egg. I think were getting close make a uturn. Uturn . Recalculating. Man, we are never gonna breed. Just give it a second. You will arrive in 92 days. Nah, nuhuh. Nope, nope, nope. You know who im gonna follow . 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