Transcripts For CNBC Fast Money 20170104 : vimarsana.com

CNBC Fast Money January 4, 2017

Nordstrom, jcpenney and others. All time highs, Consumer Sentiment at 16year highs. So whats wrong . I would say it is a shift of something weve been watching for a long period of time. They talk about declining sales. Weve been watching amazon and how it has been performing. We know it is about online. Jan was talking last week about the idea of you better have an Online Presence. If you dont, youre in trouble. And it better be on its way and building right now. Those that dont, they are getting beat up pretty hard. I think thats what were seeing manifest itself as we hear about the declining in store, thats the main thing. If your revenues are coming, the majority, much more than the majority, the extreme amount is coming in store and youre not able to keep one that, online is killing you. That implies consumers are spending, just not in the stores. The dollars are being spent somewhere. I think the dollars are being spent somewhere. Where it seems to be the hardest hit is the Department Stores. Be they need Online Presence. Macys has a significant Online Presence but not enough. This is a really important structural change for macys. They have potential for real estate. The Department Store thing is very, very big. I have macys and foot locker and cores. Well see if they are pulling back from the wholesalers. Thats been part of the strategy to maintain integrity of the band and the pricing of the brand. This is problematic for the kohls and the macys of the world. I dont know how bad it will hit coors as well. One thing you can change, buying at a discount. Tj maxx. Perfect example. Walking in and buying products are massively at a discount wont change. Throws a little more insulated. So they have to be there. Nordstrom as well. They have the nordstrom rack. Theres another play you can look at. But in general, youre right. Consumers have shifted the way they spend. This is not something new. When we look back and you look at the trump effect. You look back after the election. Everything ran. We were all talking about the weak know of Department Stores. What brick and mortar look like. If you look at amazon, pete started talking about it. February 2, reported earnings. This is one that people will get a discount on. It will get lumped into retail. It will get sold off. There is everything before trump that will still be weak. Is this true confirmation that there is in fact real problem with Department Stores . If you got the Consumer Confidence at a 15year high, you have all the animal spirits in the markets, and the consumer is still not going to the stores, what more could you ask for with a potential tax cut looming . How about the commercials going out. Those waiting. What are they waiting for . When you start to look at where people are spending, clearly it looks like autos are where they were spending their money and maybe cutting back. I think the online is the place to be. Melissa brings up a great point. If you think about the corporate. At a, when you look at the domestic facing revenues of a kohls, a macys, and you start to see where corporate taxes will be cut from 35 . And the border tax. It could offset it. What will the dollar do . Literally. Those will sell off. So i think without question, youre still going to be maybe lop sided with the tail wind versus the head wind. A lot of these names being thrown out. Theyre not going to appreciate as much as, the border tax is a disaster. A disaster. You dont know the facts or the fine points. Down to 20 and possibly 15 depending. It could be a 20 clip. Depending on the kind of reterrell you are. A potential for buyers not to rush in. Thinking that. I would buy amazon. Theres a tremendous risk there too. We can fundamentally, i think that brick and mortar was flawed going into this. Being sold off right now is for the wrong reasons. Being sold off, you could have the potential for people to come in and make a quick buck off a lot of these places. The dicks of the world, they will benefit dramatically. Theyre immune from that. And i look at burlington. They are names that will continue to work. I want to say a word of caution. We talked about this being an easy comp cycle. A little bit scary for the macys of the world. For the likes of a burlington, theyre not importing anything. All their goods are from where . Do they really buy inventory left over . Yes. Dont forget there is a lot of Bloated Inventories that have been brought down quite a bit. So burlington is a company that will benefit greatly. There are a lot of discounters that are buying specificly to stock their stores. So they will still be hit by a border tax even though perception is that theyre buying leftovers. The border tax is so bad i cant imagine it gets done in the framework that it seems to be at the moment. It is really, so i think ultimately that wont come to pass. But it is really doesnt that make an opportunity . I think it does. You have to have some guts along the way and have a belief. Yes. It is not going to pass. It goes after every person that voted for trump. He cant pass that. It is impossible. So you should go in. So like a walmart. As much as i like tj maxx, he put a little fear in me. He said the presence online is not enough. And i think that he is as sharp as anybody in all of retail. When he speaks, it makes me pause a little bit. You dont go online to see what it is. Youre right. Right now they have the luxury of expansion, and panelling the home goods. Thats all great. Theyd better build it up right now. Retail is one of the hottest goods. Does that mean the trump rally is on its last legs sf one big market bull says no. Hell tell you how to get in. Tom, a quick take on what is going on with resnail the wreckage that were seeing. Does this mean anything . I would say it is more or less profit taking. Expectations have really changed. I think whatever you said makes sense. There is a transition away from brick and mortar. Where are you, we had adam parker on earlier, Morgan Stanley saying, you guy election, you sell the inauguration. It has become the consensus in that once knees office, it is a show me at that point. Yeah. I think a lot of positive things have happened since election day. I think the most notable is, i would say you could sense that ceo confidence has come back and i think Investor Confidence has really turned. I think the notion of deregulation. It is a huge, huge deal. The last eight years have seen the largest jump in regulations on businesses in the last 50 years. I think it is a lot of reasons to say that. So what do you tell clients is this. I think weve been really trying to stick with whats been working. I think you have to sort of take a Bigger Picture view. And i think the value, its been a big rotation. I think you should take your cues from credit markets. The quality spread has been the bigger story. So just stick with what worked last year. When you look at this, to piggyback that. I see flows still coming in to buy in energy. Everyone wants to xlaen that they were overbought. People were so underowned. Under position in the all these different sectors. They are still chasing the market. When i see the market, theyre still chasing these names. If you take 50year deal, energy hit the bottom of a sevenyear cycle. Earnings need to keep one expectations. Theyre super elevated. Is that going to be possible . Over the next six months . Really this fiscal spend plan that is being put to the table, is that really going to put into place quick enough to really have these companies show earnings . I think valuation is a developing concern. Were 17 times earnings. You cant stay market is cheap anymore. I think the opportunity is really looking at margins. I think you have to think about who has low margins. Dont have the sensitivity. Thats banks, energy. I think there are ways to find opportunities. This is the most polarized Congress Certainly in my lifetime. Our lifetime. What could derail your bullishness about this rally . I think theres plenty to worry about in 2017. Well spend time talking about that when we publish our outlook. I think i have a handout here. Ill just leave it on the table. You dont to have look far. And there are a lot of things that could spell trouble. I think we have to think back to 2016. A 4 pull back from august to november made people want to leave the business. Thats nothing. All right. Well have you back when you publish your 2017 get on work. Were a few days in. Thank you. Thanks, guys. Im giddyaping. He also talked about valuation. The valuations right now at 17. Do you know what is not at 17 . The financials. The banks are 14, 15. And many aspects of technology as well. As far as s p 500, energy has a lot of room. You get energy, financial, just slightly higher. Thats a huge composite. Coming up, Health Care Stocks are soaring. What would be the hot trade of 2017 . Plus vanguards greg davis is here to tell us what he says is the biggest risk to the bond market. The answer might surprise you. And is eating out going out of style . Well break down the fast food fallout is that why they are skipping the trump rally. Reach yosanm your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. And if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. We have a news alert on Donald Trumps pick for secretary of state. Yeah, hi. Rex tillerson just left a meeting here with chris kuhns, the senator from are delaware who will be weighing in on whether or not Rex Tillerson should be the next secretary of state. The meeting went that 45 minutes longer than we were told it would go. And afterwards, senator coons came out and discussed it. That Rex Tillerson talked about being the difference between exxon and secretary of state. And advocating for the united states, not just one company. He said he had real concerns with the way president elect trump has been talking about Vladimir Putin. Heres what he said just after that meeting broke up. Im she concerned that president elect trump seems to be repeatedly siding with Vladimir Putin and his russia, and folks like assange and others at the cost of disrespecting or disregarding our intelligence community. In the end, chris coons said he hasnt made up his mind on how hell vote. Just to be cheer, senator coons said he is concerned, did not indicate whether or not tillerson had anything to say about that. I asked directly, did Rex Tillerson tell that you he believed russia hacked this election or not . And senator coons said i wont tell you the answer to that question. I think thats a question that Rex Tillerson has to answer and well get that answer in the confirmation hearing and it is an important one. All right. Thank you. Im sure it will be contentious. When you look at i for about five seconds, i thought, this is such a terrible pick. Then thimd guy knows every foreign leader in every area that there is hot spots. He knows regions better than anyone in the united states. Tremendous. Lets get to another big battle. Mike pence laying out the new agenda for the trump administration. The first order of business is to repeal and replace obamacare. That is our message today and it will be our message on capitol hill. The democrats firing back at those remarks. Theyre running to do this first is a huge mistake for them and the country. It is a huge mistake for them on the base i of a. C. A. Because they dont know what to do when they repeal. One of my colleagues called it repeal and run. But it is a huge problem as well because now theyre responsible for the entire health care system. Despite all that noise, health care kicks off as one of the best performing sectors of the year so far. Granted, were two days in. More than 2 sperse a gain after a lousy 2016. Pete. Weve got lots of people saying, health care sector, there will be a row taste to the lagging sector. Do you buy that in. I have done some buying. I bought into gilead and some of the names beaten up. And i think there will be some negotiation, some cleaning up of this entire thing in terms of the health care world. And i do still have a little apprehension. I know how these tweets work and it makes me nervous. In terms of the drug pricing. At any moment, that could be another button pushed on the twitter machine. You have biotech as a sizable portion. You have insurers, hospital stocks, and all of these sub sectors stand to be hit in some way in the coming week. Either by a tweet on drug pricing, a repeal of obamacare. Does this make you want to be in this sector . No. The easiest thing is the repeal of obamacare. I think he will keep a lot intact. The problem is the head winds are pricing. The pricing is going to loom. It is bipartisan. They are going on hit you. Time and time again on hmos, on reimbursement, on everything involved. The distributors, i wouldnt touch them. Biotech, look. Pricing will be an overhang. No question about it. Im sorry to say that, there are better opportunities for generalist investors. They are not necessarily focused on biotech now but they will be again. I look at i and say if youre a long material player, some very cheap valuations. Especially on the larger cap biotech names. Key word there is long term. In terms of trying the trade it. When did i gilead recently, did i the stock. I bought the stock and ive been selling calls against my position. Volatilities are a very well elevated. We need on get generalist investor back. That sector had gotten hit when in the last year it was so difficult on make money on obamacare. So the repeal of obamacare, it is not necessarily a terrible thing for them. But there is a lot of uncertainty in this space. I think the sentiment has been so unbelievably bad for so long in the biotech, it wouldnt surprise no see meaningful pop. Today was nice but it doesnt take long. You have been. But out for a long time. And not ready to go back. Waiting for a trade. Still ahead, the commodities king, the call for 2017 and he has four ways to profit from it in the new year. Youre watching fast money. Youre watching cnbc. Yep, thats what happened to bonds last year. But vanguard says the biggest risk still lies ahead. Dont worry. Just keep your hands and feet away from his mouth. Investors are losing their appetite. ÷ the trump rally continued today. The dow is now within 60 points of 20,000. Retail stocks taking a leg lower after macys reported disappointing holiday sales and kohls lowered its veritable blood bath there. Here coming up in the second half, restaurant stocks getting a boost today on the heels of an lists upgrade. Could the industry be a sweet spot for investing in the new year . Well explain. Plus, one area of the market could see a boom in 2017. Hes got four ways to play it. First, the bond market which seemed to ignore the fed minutes earlier today. It comes as rates hover around the highest levels in 27 months. Lets bring in Rick Santelli from chicago. The bond market barely looked at those numbers. Thats right. And it is big news in and of itself. Why Pay Attention to an entity that is basically clinging to a market that is already raising rates. Aid guest this morning from callisters and he framed hit the way. Tend margaret has done three janet yellens. In my opinion, considering theyre holding the range, i think the market and Interest Rates and comingling of stocks and Interest Rates seems to be pretty content at this point. I think the fed is in catchup mode at the very least. Isnt there a fear that amongst those participant hue talk to every day on that floor, that it will pay catchup to the extent it will rock the boat, so to speak . You know, quite frankly, there is very few, very few people i talk to that think the fed will hit the gas pedal too hard. Most traders that i deal with, the source and mingling on the floor, think it is more dovish than hawkish with regard to the pace of the tightening. If you were to ask me if Inflation Expectations ramp up, yes, it would. Talking about the fed and the markets, at this point, it is a bit disconnected. You read the fed minutes and i read them all. It is not easy reading. They seem to be very, not putting a welcoming mat out for some fiscal stimulus. And times in the past, they talked about the need for it. Im still a bit surprised that they listen. I understand uncertainty. But i think they should not punch the gift horse. Where do you think the Dollar Strength is . Where does it get too much for the fed to handle . You know, the dollar is a tough one. Obviously, if you want inflation trade, youre better off with a weaker dollar. With inflation toasting away but that isnt the reality. I think the Central Banks are painted into a course, much because of the market because of growth and productivity ahead. That will create a firm dollar. Will it be too firm . I think the great governor here that will govern it back a little bit is some of the anxieties in japan, china and europe. I think that some of the capital that leaves those countries will help keep a lid on whether it is the strong dollar or maybe more important to the discussion, on dramatically higher rates that would feed into a stronger dollar. Always great to have out fast. Thank you. The worlds Biggest Bond Fund satisfies lot could be at stake as president obama gets toward hand over the reins to donald trump. Always good to see you. You say the biggest shock to the bond market could be a completely external one . Geopolitical. Yeah. I think thats a factor that continues to hang over the market. And you know

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