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On this episode of On The Tape Guy, Dan, and Danny discuss Meta’s unmitigated earnings disaster (3:00), analysts changing their tune on mega-cap tech (10:00), big reports coming next week (14:15), the beginning of the Fed pivot (18:45), opportunities in the market (26:50), Guy gives an impromptu ROTT (31:40), Elon Musk buying Twitter (40:05), instant reaction to Amazon sinking 20% on earnings (49:35), and Danny’s NFL picks (52:05).
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Show Transcript:
Guy Adami: [00:00:00] CME Ad. [00:00:01][0.4]
Dan Nathan: [00:00:30] iConnections Ad. [00:00:31][0.3]
Guy Adami: [00:01:21] We’re going to start things a little differently this week on the On The Tape podcast. Guy Adami here always joined by Dan Nathan and Danny Moses. Danny Moses I’m going to say something and I want you to repeat it. So if I say like happy, you say happy. Let’s just practice because I know you’re not that bright. Happy. [00:01:37][16.2]
Danny Moses: [00:01:38] Happy. [00:01:38][0.0]
Guy Adami: [00:01:39] Okay, well done. Okay, so here we go. You ready, Danny? [00:01:41][2.6]
Danny Moses: [00:01:42] I’m so ready. [00:01:42][0.3]
Guy Adami: [00:01:42] What’s your name? [00:01:43][1.3]
Danny Moses: [00:01:44] What’s your name? [00:01:45][0.5]
Guy Adami: [00:01:45] Who’s your daddy? [00:01:46][0.6]
Danny Moses: [00:01:47] Who’s your daddy? [00:01:47][0.5]
Guy Adami: [00:01:48] Now, for you fans out there of a certain age and that would be any from 55 and up. That is a lyric from the zombie song Time of the Season. And I will tell you, we are in the time of earnings season. See what I did there Dan Nathan I mean, that is, by the way, zombies is interesting because what this Federal Reserve has managed to do over the last 13 years of largesse, Danny, is to create some of the biggest zombie companies in the history of mankind. But we’ll talk about that later. By the way, as I mentioned, this is the on the tape podcast. Later on, we’re going to have a conversation about Elon Musk. I’m sure you want to stick around for that. And Danny Moses, who is now a pedestrian, 11-9 in the league where they play for pay. We’ll put out a couple picks as well. But earnings season is upon us. And as you’re listening to this today, hopefully Friday, we’re going to have a special drop of MRKT call, 11 a.m. Eastern time, because by then we have heard from Apple, we have heard from Amazon in this earnings season. If you’re listening to this on Saturday too bad because you missed our special market call on Friday and I’m saying this on Thursday, that’s like back to the future shit. Anyway, earnings season is upon us and we’ll just start with the obvious. Facebook was an unmitigated disaster and I will say this, it couldn’t happen to a nicer guy in the form of Mark Zuckerberg. [00:03:11][83.0]
Dan Nathan: [00:03:12] Oh, guy, you just got all [00:03:14][1.4]
Guy Adami: [00:03:14] I’m a hater. You know I’m a hater. Say it [00:03:15][1.2]
Dan Nathan: [00:03:15] For years, Guy would talk about the stock and divorce it from the company, from the CEO the products, which, again, you’ve been saying would fall under the auspices of what? [00:03:25][9.8]
Guy Adami: [00:03:26] Well, ESG, as I mentioned, you know what? There’s a certain truth to that. So I was well ahead of the call. [00:03:31][5.2]
Dan Nathan: [00:03:31] No I understand. So so what’s interesting about this is that a year ago, it was a $300 stock. It was nearly $1,000,000,000,000 in market cap. And here we are a little less than a year later, it’s a $100 stock. The company has changed its name. It’s changed its focus. They have massive competitive issues as it relates to TikTok, massive secular headwinds as it relates to the digital ad space in a recessionary environment. I mean, the list goes on and on and on, except one thing is like, do you really want to make the bet right now that Facebook Meta is MySpace is circa 15 years ago? I just don’t think that makes a whole heck of a lot of sense. I actually bought a little stock today at 101. But again, I don’t like the CEO. I don’t like his vision of the future. I don’t like what they’re doing with the company. I just have to assume that you’re going to have some sort of kind of reversion if you tamp down the spending. And this is probably tradable. [00:04:21][50.1]
Danny Moses: [00:04:23] Dan on the FactSet machine. What are the numbers now for 2023 for meta? I’m just curious what it is. And the reason I say that is it’s now morphing. It’s not really a growth company anymore. Right. So it’s going to burn back through the atmosphere here. So that’s the problem. It’s now in no man’s land, the stock. [00:04:38][15.2]
Dan Nathan: [00:04:38] I mean, this is good and bad, Danny, if you think about it. So if you’re looking at the FactSet consensus here, we’re looking for negative year over year EPS growth on a gap basis for 2023 and revenue growth and on an adjusted basis expected 7% and revenue growth expected to be 7%. Stocks trading about ten and a half times. So, yes, it’s not a growth stock anymore. It’s a value stock. Here’s the one thing I’ll say. They have basically 2 billion daily active users and 3 billion monthly active users. They monetize far better than anyone else in the entire social media space. And I guess my point is about a stock that’s gone from 300 to 100, sentiment could not be worse. It’s not a great bet playing for this thing, going the way of MySpace. And the other thing I’ll just say is looking at the analyst consensus ratings, you got 38 buys, 17 holds and 5 sells. That’s changed a lot over the course of this year. So sell side sentiment has kind of changed a bit too. [00:05:37][58.6]
Guy Adami: [00:05:37] Did you happen to watch CNBC fast money on Wednesday evening Dan Nathan? Probably not. You did because one of the things I mentioned is on Thursday you will see Facebook and I will not say Meta. I’m just not wired that way. Trading north of 200 million shares. Yeah, that proved to be prescient, which is a word that I love using that I can’t spell Danny, because in fact it traded north of 200 million. I mention that because that to me is classic capitulation. Number one, to your point Dan, now is not the time to be prescient is to the downside. And that doesn’t mean it can’t go a little bit lower from here. But now is when you have to say to yourself, to your point, here’s a unique brand with 35% of the global population effectively on their platform in one way, shape or form. They’ve done a miserable job explaining what the metaverse is to people that don’t understand what the metaverse is. They’ve bought back $42 billion worth of their stock at an average price of $300 over the last year, which makes them lousy stock traders. So you can’t get much worse than it’s gotten. Now, in my opinion, is when you should be building a position in Facebook, not taking off a position in Facebook. [00:06:49][71.9]
Danny Moses: [00:06:49] That’s why right I think investors were pissed also that this big of a mess. You have to pre-announce that miss right? [00:06:54][4.7]
Guy Adami: [00:06:54] Well, let me ask you a question, Danny. I appreciate you saying that five years ago, I don’t know if it was a thing you had to do or not, but companies would pre-announce both positively and negatively. That’s gone by the wayside. Nobody seems to do it anymore. [00:07:07][12.7]
Danny Moses: [00:07:08] I mean you don’t have to do it. It’s just very good practice to do it because it builds credibility. So today, now they’re going to have to earn back this credibility so they don’t have to put together a couple of quarters. So, yes, it’s probably a value trap, but I have no I didn’t have a position going into it. I don’t have a position now. I do think they might benefit we’ll see on a fallout from Twitter, which we’ll talk about later. I would imagine Instagram or maybe they get back some people that weren’t as active as they were before. Maybe advertisers start going there, maybe they create kind of a business like Twitter foothold somewhere. Dan, I don’t know. What do you think of that? [00:07:36][28.1]
Dan Nathan: [00:07:37] Well you know, it’s funny. It’s not that they’ve lost users. It’s just that essentially TikTok has really taken a lot of mindshare as it relates to the attention, the amount of time that people are spending on it. They still have 80% gross margins. And obviously you can talk all day about expenses and operating margins. That’s the reason why the stock has been destroyed. And so ultimately, this is a game that Amazon used to play. They used to spend, spend, spend. And then they take their foot off the pedal and then they get the leverage of that spend. Now, that’s the exact opposite of what’s going on with Amazon right now. So I guess when I think about this again, divorce from the management, divorce from the products, divorce from their negative impact, I think on a lot of the users, I think Mark Zuckerberg’s going to have a second act. And so whether you think at 97 or 87 or 77, it doesn’t really matter. You’re not going to go into a full position right here anyway. You’re going to average in at a certain point with a $250 billion market cap and $45 billion in cash. It’s not going to be able to go too much lower. [00:08:37][60.1]
Guy Adami: [00:08:37] It’s interesting you say that. So let’s just play that game out, because right now, forget about cash position for a second. This is a company that’s trading less than two times revenue at $97. The price you just mentioned, it’s trading at 11 and a half times next year’s expected EPS. I mean levels that in your wildest dreams you never thought it would get to. Now this is a company clearly with some issues, without question. But if you listen to some of the commentary, there are few people out there that said if they had just cut that $10 billion spend in half, let’s just play it out. The stock would have been up probably 10% on this quarter. And if you start saying if they become fiscally responsible, you’re talking about a stock that a lot of people thought would be up 20%. [00:09:19][41.6]
Dan Nathan: [00:09:20] Yeah. All right. Let’s hit the other big ones because this is a very specific story. And I think more importantly, Microsoft. Danny, you and I were talking about it earlier in the week. I mean, a lot of investors were kind of holding their breath because the idea that if there was some weakness in their enterprise businesses, which they have not really pointed to for the better part of the last 3 to 6 months or so, that might be something that is really just kind of an important footnote in this cycle. We’ve been talking about the overexuberance by the sell side in some of these large cap names. We were waiting for investors to join the party here at the start of the week. If I looked at the FactSet compilation of analyst ratings, Microsoft had 52 buy ratings, six holds and no sells. Alphabet had 48 buy ratings, four holds, no sells. Amazon 55 buy rating to hold, one sell. I mean, just think of the exuberance that exists as far as the sell side and that front. So now all of a sudden, a lot of analysts actually had to kind of change their tune a little bit in the Microsoft and the Google. And let’s see what they have to do with Amazon tonight. [00:10:22][62.2]
Danny Moses: [00:10:22] Well, it’s interesting is that we kept saying if they come and take out the generals, which they’re doing right now, the market was at risk, too. What’s amazing is that money is finding a home in certain things in some of these other earnings that are out there. Right. Caterpillars of the world, McDonald’s of the world, like things like that. And it’s really interesting to watch that happen. Like to kind of the old school industrials and the old school restaurants, companies that have been through many cycles. And so we’re watching this transition. It’s probably the healthiest thing that you could actually hope for. We’ll get to the central banks in a minute. That’s why the healthiest thing you can hope for is you’re kind of moving from these not into cash, into other names, which happen to be putting up decent numbers. So to me, that’s my main takeaway is you had an excuse to sell these companies. You also had an excuse to put them in something else. And those are two completely different things, in my opinion. [00:11:07][44.3]
Guy Adami: [00:11:07] And we will talk about central banks, and I’m just going to posit this and we’ll sort of talk about it later. But again, one of the many, I would say non intended consequences or unintended consequences of central bank largesse. It also made the analyst community really lazy to the point that you just made, Dan. I mean, Facebook has been more than cut in half and nobody changed their tune, by the way. That was a great scene. I believe in Rocky 2. Danny I remember when Burgess Meredith, the guys playing the piano in that beautiful hotel in the foyer of the hotel and Burgess sounds like it change your tune. I love. That’s a little. [00:11:41][33.6]
Dan Nathan: [00:11:42] More than cut in half. It’s down 70 [00:11:43][1.1]
Guy Adami: [00:11:45] I know it’s crazy. Yeah and analysts nobody nobody changed their tune. [00:11:49][4.1]
Dan Nathan: [00:11:49] Yeah. But Danny, to your point, the rotation that we’re seeing, I really wouldn’t have thought it at this point. We just made new lows in the S&P and the Nasdaq. And we talked about this, I think last week. Russell 2000 small caps did not make a new low with these large cap indices over. So the rotation is surprising to me. It does tell you that money wants to go somewhere in the equity markets. They’re seeing some value. I’ll just say this, though. It goes back to some of these tech names that were trading well over S&P market multiples and now have come down to earth. Some of them are just too damn cheap. I mean, they just are when you think of just kind of their user bases and the cash and all that sort of stuff. So I do think you’ll see money come back in that you just need to see somewhat of a capitulation. [00:12:30][40.6]
Danny Moses: [00:12:30] But guys, on these analyst ratings, I don’t want you to spend any time because we talk about the I’ve talked about them ad nauseum about how useless it is. What is the alpha created when there’s 62 analysts to cover any name? Granted, it’s always going to be buys for the most part, right? We’ve talked about the inherent conflicts that exist on the sell side. So again, you got to do your own work on all of these. [00:12:48][17.7]
Dan Nathan: [00:12:49] No, it’s not important. There’s nothing fundamental there. It’s just more from a sentiment standpoint. A lot of listeners of this podcast, they don’t talk to all these institutional sort of people, you know, remember the whisper numbers. And so a lot of them, all they do is get to listen to maybe some of these usually bullish analysts come on CNBC. So I guess the point is if there’s 55 analysts who cover a stock and 98% of them have a buy rating, at some point you have to start thinking about what could go wrong. And so to me, that’s what I find interesting about. [00:13:17][28.4]
Guy Adami: [00:13:18] We started this time of the season and next week it is that time of the season. We get some big companies next week and I’d really interested to see what sticks out to you of the many that report, the ones that I’m looking at, Eli Lilly on Tuesday. I mean, here’s a stock that we have talked about here on on the tape that continues to be the lower left, upper right, making new all time highs. The knock on Lilly is going to be valuation. I get it. Probably the biggest and most important big cap pharma stock out there. I’ll look at Qualcomm on Wednesday after the bell, which on valuation you can make an argument for. But these tech names, these chip names have gotten taken out to the woodshed. Let’s see if Qualcomm can sort of stem the tide. AMD on Tuesday as well. I should have mentioned Lisa Su’s done a great job, but you talk about a stock that’s more than cut in half. Well, AMD is one of those names. And just quickly for me, Conoco Phillips, I believe on Thursday, these big cap energy names, Danny, have been off to the races. ExxonMobil making a new all time high, Chevron, Conoco within a whisper. And now all three of those names are basically trading at about $1,000,000,000,000 valuation. So energy, despite the fact that the underlying commodity, which Dan Nathan has done a remarkable job handicapping these energy names have been on fire. [00:14:33][75.2]
Danny Moses: [00:14:34] Every time oil kind of starts dropping into the low eighties when West Texas drops into the low eighties, people, like I told you, are going to sell their energy and then it kind of hovers there. Then it kind of makes its way back when you get earnings coming in like they are on top of this and you see companies trading at two times three times earnings. Right, or four times earnings for next year. If you project those prices into next year, these things are just too cheap to ignore. And one of the thing about kind of the flight out of FAANG and into the stuff, notice the names that are doing the best. They have dividends. We’ve talked about this for a long time. There’s a reason that they pay a dividend, not just because it’s attractive to invest in relative to where rates are, because their ability to have paid a dividend all along this time tells you these are cash flow and companies. So the health care names, a lot of them pay dividends. The oil names in this stuff are starting not just buy back stock paying out dividends. Right. The yields are great. Caterpillar, McDonald’s, all these names which you’re seeing, there’s kind of a method to this madness, if you want to call it Dan on this rotation that’s occurring. And that’s the healthiest thing that we’ve seen in this market. [00:15:32][58.0]
Dan Nathan: [00:15:33] John Butters over there at FactSet. He had in his earnings insight blog a little factoid I thought you’d find interesting, Danny. We all know that energy’s been a huge contributor to S&P earnings this year. It’s the largest contributor among all of the sectors as it relates earnings growth for Q3 2022 without energy. I’m just curious how you think about some data like this. The earnings decline for the S&P would be nearly 6% for Q3. And I thought this was really interesting though, but starting in Q2 2023, the energy sector is predicted to be a detractor from earnings growth. So how do you think about that? Because, again, if we are in a recession mid-next year, let’s just say S&P earnings across the board are going to be very depressed here. And so if you don’t have energy doing the job, what do you got? [00:16:18][45.8]
Danny Moses: [00:16:19] Well, yeah. Listen, there’s a lot of ways to look at it. Still not large enough as a percentage of the S&P yet. I don’t know where it is. I know we’re kind of in the mid-single digits. We’re working our way probably up six, 7% of the S&P down. I don’t know if you can see that on your machine where we lie right now with energy, maybe even a little bit higher now. But that would be to your point, if that’s true. Yes, the market’s going to be down a lot. It’s been a huge contributor, not just any growth, but at this point, I think the overall S&P levels and so again, we’ve said this now for six months. Every day that goes by, that oil doesn’t collapse as a day you should be owning these stocks and you can’t be short them. And so if there’s demand destruction coming, we’ve seen bits and pieces of demand destruction in China. We know what’s going on in Europe. Yet oil still where it is. Is it geopolitical risk that’s keeping oil upward is I don’t know. But I think it’s a mix of everything. So unless demand goes off of a cliff, I think you’ve got to own these things. [00:17:08][49.3]
Dan Nathan: [00:17:09] So, Danny, the S&P from that what was it, two Thursdays ago, that huge intraday reversal is up nearly 10%. [00:17:15][6.1]
Danny Moses: [00:17:17] Oh I remember. [00:17:17][0.7]
Dan Nathan: [00:17:17] We just talked about just this week, though, some of the largest components here down 10%. Are you just a bit floored by the fact that the S&P has not given more back with some of these generals like we talked about being shot here? And again, I really do think it comes down to Apple. I’d be surprised as you listen to this, if Apple had anything really good to say about guidance, they probably executed decently in a difficult environment. But again, if Apple were to gap and Amazon were to gap lower, then that’s really the test for the S&P if it can kind of hold in there. [00:17:49][32.2]
Danny Moses: [00:17:49] So let me answer that two different ways. One is that if you had shown me those names, the Meta’s of the world, right, and these things have gotten hammered, I’d have said the S&P, without knowing anything else with the S&P, was probably 3200 3300. Right. That’s what I would have thought. But little did I know that you can call it a Fed put. You can call it anything you want. You got triggered because of the broken bond markets globally and what was happening in the currency markets in Japan and the bond markets in the UK, it came out and so we knew when those IMF meetings were in DC, we talked about this last week, late in the week, I think the 14th or 15th of October in Washington is when all this noise kind of started and there was something that was transmitted. Obviously, we talked about the New York Times article last week that a lot of the banks got the heads up, the Fed and Treasury were speaking. We’re going to be there for you. We’re going to be there for you. We had a coordinated little global bank thing go on down. So if I had known that piece of the puzzle, then I probably wouldn’t have said 3200. So what we have here is the beginning of the pivot becoming clear that they’re probably going to acknowledge that the Fed will next week start slowing these rate hikes that’s built in the CME Fed fund. Futures are telling us that already. So what do we have now? We just used up what I would call a massive bullet of global central bank liquidity coming into the market. So it happened sooner than I would have thought. But again, to end it with this, Dan, I think it set us up even potentially feeling worse the next time that we drop here. [00:19:09][80.0]
Guy Adami: [00:19:10] It’s interesting, BlackRock is telling private clients to expect, I’m quoting now pivot language in next few weeks. And that, Danny, is something you alluded to for quite some time. So it’s happening right before our eyes. And to your point, the reason why there’s some buoyancy here in the S&P is exactly that. And I will say this, I’ve said it since I want to say the 14th, 15th of October. I thought around that time the landscape looked eerily similar to the landscape we saw around June 16th. We saw VIX trade north of 34. We saw some stupid reversals intraday, which we hadn’t seen since June of this year. And I thought the market set up not for an 18 and a half, 19% move that we got from the middle of June into August. But, you know, a 15% move, which would take us to about 4000 and the S&P from that 3491 low. And I want to be very clear about this in no way means I am bullish. I think the market go up in the short term. I still think when the dust settles, after everything we’ve learned about earnings, the landscape, the slow down, 3400 and lower is a foregone conclusion. [00:20:18][67.9]
Dan Nathan: [00:20:18] And that’s interesting because there’s two ways for me to respond to that a little bit. I mean, we know a lot more than when the market started to rally in June and really got a little bit of a juice of some lighter fluid in mid to late July. And then we had this crescendo into mid-August. But what do we know? We know that the earnings picture is much worse. You also know that a lot of analysts and strategists are starting to come around to that. So we’ve just starting to see those revisions for next year’s S&P earnings. On the economic front, though, there’s one little thing that it’s just a bit pesky here, and that’s the unemployment rate. And so here we are at three and a half percent. So for everyone who thinks that the Fed is going to be able to really whether it’s a pivot or a step down or where there’s all sorts of language, I don’t know, with wages where they are. I don’t know how they do that just yet. So I’m not saying that the December meeting should be anything more forecast than 50. And I’m in your camp, Danny. I mean, I do think that there’s no way that they’re going to continue to raise rates into the new year because the pace at which things have slowed down. [00:21:18][59.8]
Danny Moses: [00:21:19] Listen. We had a 2.6% headline GDP number today. Right. But when you peel it back, the consumer wasn’t strong. And there’s a great quote here from Tim Quinlan, who senior economist at Wells Fargo. He says Borrowed time is how I would describe the consumer right now. Credit card borrowing is up, saving is down. Our costs are rising faster than our paychecks are. That kind of sums it up. So you can look at the headline number, the GDP. But to me, that’s kind of where we are. And it’s not about being bearish or bullish. This is actually just trying to extract the facts of kind of what’s coming in and how to interpret that and how do we help people. We’ve been saying all along there are a lot of names that you can own in this market. We’ve had strategists on which have echoed that as well, health care companies that have pricing power. You saw McDonald’s, you saw Chipotle. However, you said, I can never say it correctly, but what did they say in their quarter? They’re expecting their products to be 15% higher in Q4 year over year. So a burrito that was $6 is almost $7 at this point. But they’re telling you what they’re going to be doing. Yes, it’s holding up for now. But there’s going to be a breaking point that obviously hits here at some point to the consumer. [00:22:19][60.1]
Guy Adami: [00:22:19] Well, that’s what real inflation is, right? When you hear from Coca-Cola, when you hear from Pepsi saying that 16% growth. No, they didn’t. They raise prices by 16%. So if you really want a benchmark of where inflation is, they’re effectively telling you that. But what’s interesting and again, here’s the Fed we keep I can’t get away from it. I mean, at a certain point, I’m just going to have to stop like that. To me, that’s my Moby-Dick, right? That’s my white whale. We’re all on the Pequod right now, and that’s my Moby Dick. Anyway, you talk about political pressure, and again, politics bores the shit out of me. But I will tell you, prior to the 2016 election, then candidate Trump correctly talked about the bubble that the Federal Reserve was creating by keeping interest rates low and adding liquidity. He happened to be right at the time. Magically, when he was President Trump, he went full 180 on then Jerome Powell saying interest rates are too high, you’re killing the economy. October into December of 2018, he browbeat Jerome Powell into then acquiescing. That was the political pressure then. I mean, that’s just factual. I don’t care who you voted for. It doesn’t interest me. Don’t @ me on Twitter. Well, magically, this week, Senator Sherrod Brown sent a letter to Chairman Powell saying, hey, you’re killing us here Powell So now the political pressure is coming in the forms of Congress. It’s really interesting to see if he acquiesces or if he’s forced to acquiesce. Danny. [00:23:46][87.3]
Danny Moses: [00:23:48] Yeah, listen, I mean, mid-term elections coming. We were trying to keep the price of oil low, releasing oil out of the SPR, right? These are the things that you would normally do. It’s common sense stuff that’s occurring. I’m sure Washington right now is thrilled that the market has recovered. Maybe they think that helps them. Was there something coordinated there with Yellen in the Treasury? I don’t know. It wouldn’t be out of the ordinary. Right. That’s kind of normal course politics and what’s happening. So but beyond that, looking past all of this, is that meme we’re supposed to sell the election regardless of the outcome because of what’s happening here, I don’t know. But looking forward here, Q4 and European winter, which has more meaning than one coming to us just because we know, yes, energy prices have subsided. They’re because storage is ample right now. But it’s only going to take a couple of cold tricks over there to get those prices back up. So things have settled. You have the pot on the stove. It was boiling. It’s still on the stove. It’s simmering right now. I expect it to boil up here soon. So. [00:24:40][51.9]
Guy Adami: [00:24:41] You know, we try to look ahead and game these things out. So again, I think the market rallies into the midterm and I think a couple of things should happen post when you no longer have to run for election, all bets are off, especially in terms of Danny, what it can mean to energy prices. Because to your point, you know, we’ve released everything from the SPR. They’ve tried to somewhat successfully keep crude oil prices down despite the fact that gas prices are headed higher. I would submit that you could see a huge commodity rally post-election because at that point, nobody needs to run for anything. They have two years to sort of figure it out. And again, I’m not a conspiracy theorist. That’s how I look at the world right now. [00:25:21][40.3]
Danny Moses: [00:25:22] Listen, people love when the White House is controlled by one party and Congress is controlled by the other. That’s always been a recipe, right? People will tell you, oh, that’s the best time the market can perform. Well with the Republicans if they do take control. There is no tax cut coming. You want to see what just happened in the UK when they tried to cut taxes. So what’s going to happen here? Because we have some issues with some debt that’s occurring. So those old playbook throw them out the window. But I will tell you that is another bullish pattern or bullish thing that has occurred here recently is the belief that that’s going to happen. So whether it happens or not, we shall see. But I think that’s what’s going on as well Dan. [00:25:53][31.8]
Dan Nathan: [00:25:54] So, Danny, what do we like here, buddy? I’ve been playing around with some of these names that have just kind of beaten up sentiment really bad. We know what the headwinds are. It’s nothing fundamental. I think we did spend a lot of time on Meta. There’s a lot of own goals right there. Right. Like we can all agree on that. That’s just a company that shifted course and maybe they saw something that was coming. But there’s a lot of companies like look at Nike was a good example. Think about where their manufacturing is. Think where a lot of their expected growth was. Think about the premium multiple it was trading at. Think about a weakening consumer globally because of their lack of discretionary spend, because of inflationary pressures. I mean, there are opportunities here. And I’m just curious, you said a few weeks ago when we had Mike Wilson on that you turn bullish when he gets bullish. Now, I know that you didn’t think he was going to go tactical bull and you’d have to change your mind. Are there things that are starting to pick your attention? Guy just said that energy could have this rip roaring rally. Have the stock prices the XLE, the OIH. Have they stuck around enough where it’s making interesting for another leg higher? [00:26:49][55.4]
Danny Moses: [00:26:50] Well, if I had the red phone in my house that some of these strategists might have direct line into certain people, central banks of maybe I would have gone a little more bullish. But that being said, listen, you’re seeing it right now. I said when this earnings season started, take a look at these earnings of companies, read through them, see what they have. Do they have pricing power there? So I think you can own stuff in every category. But what’s clear to me is the defensive names are starting to outperform more and energy. Yes, it’s not traditionally defensive, but it’s still very cheap. So right now we’re in this soft landing thing. Right now, the market’s trading if you showed me 3850 on the S&P, again Dan if I didn’t know anything else was going on, I would say people are interpreting a soft landing going to be occurring. If that’s true, you can’t own enough energy because if it’s a soft landing, that means there’s not as much demand to story. So energy. I still like these health care companies. You’re seeing pricing power on the insurance side of things, right? Goldman and Bank America, by the way, and JPMorgan Morgan have rallied, what, 17 to 20% off the lows just two weeks ago. To your point, we know that happened because the rates come down. I wouldn’t go there, though. There aren’t names that I would chase right now in that area, things like that. So, again, keep going through the earnings season and you’re seeing some winners and you’re certainly seeing some losers. And Guy, if you hadn’t started with that song, I would have done. Don’t Stop Believing by Journey. [00:28:00][70.6]
Guy Adami: [00:28:01] Hold on a second. First of all, journey sucks. And again, please don’t @ me. Don’t Stop Believing is one of the worst five songs in the history of rock and Roll. Please don’t @ me. And the fact that The Sopranos, one of the greatest shows in the history of television, basically ended the not the season, but the entire show with that shitty song, it left such a bad taste. I’m getting myself worked up right now, just thinking about it. So please, never again. If you want to listen to a Journey song, it’s that song. Light’s that’s a good song. Everything else sucks. [00:28:36][35.0]
Danny Moses: [00:28:37] Dan you know what I think? I think a high school girlfriend once broke up with Boss to that song. I think you have something else going on with that song because it does make sense. But can I say one more year. [00:28:46][9.2]
Guy Adami: [00:28:47] Its your podcast said whatever you want. [00:28:48][1.4]
Danny Moses: [00:28:49] I just want you to know the intervention that has occurred. I’m just going to ram this out because people like, Oh, doesn’t matter, let me do South Korea intervene in central bank. They’re actually buying corporate bonds. Taiwan, Philippines, Vietnam, Malaysia, Thailand, Japan, India. Right. [00:29:04][14.7]
Guy Adami: [00:29:04] Bank of China. [00:29:04][0.3]
Danny Moses: [00:29:05] That are intervening. Bank of China, you know, I get that’s been going on here. So it’s not just about the UK. Yes, we talk about the big banks it’s everybody out there trying to defend their currency is trying to do whatever they can. So it’s not a global coordination per se, but there are global activity. So I just wanted to take a step back, make sure people understand that and see that. [00:29:21][16.4]
Dan Nathan: [00:29:21] So, yeah, well, here’s the deal, right? So November 2nd, we have this meeting near certainty that the Fed is going to do their fourth consecutive 75 basis point hike, CME Fed funds futures. Danny, as you said before, pricing about a 50 basis point hike in December. So here’s the deal. So we get through these earnings, Apple and Amazon, as far as I’m concerned, after that doesn’t matter. We started off earnings season or that little appetizer that will amuse boost which was FedEx remember that and moods boom boos and that got everyone kind of really beared up if you think about it and then bank earnings happened and they were so depressed and to Danny’s point before they just rip and so now you can take your Netflix as a one off or whatever. There was just a lot of bad tech stuff. And so here we are now. Maybe we rally into November 2nd because the hope of a pivot, if we can’t rally out of that and I don’t know what really kind of saves the market from going back and retesting those lows from a couple of weeks ago. Because, again, to your point, Danny, a couple of weeks ago, that only really happened, the combination of unusual negative sentiment and then this coordinated central bank action. [00:30:28][67.0]
Guy Adami: [00:30:29] So you’re talking about or I’m sorry, because now I listen to you, by the way. Listen. [00:30:32][3.3]
Dan Nathan: [00:30:33] Is that little thing that they might bring down, say, this is the compliments of the chef and then we’ll have an appetizer and then you might have something to cleanse your palate. It could be something in the form of like a lemon sorbet or something like that. [00:30:45][12.2]
Guy Adami: [00:30:45] So here’s how my mind works. And Dans gonna get mad at me. But, you know, we got time to talk because that’s what we do here. So I think immediately of The Godfather two. Yeah, when they’re at you recall, they’re out there in Tahoe and Frank Patanjali shows up and they’re offering him Canopies. Canopies. [00:31:01][16.2]
Dan Nathan: [00:31:02] Is that a good friend? [00:31:03][0.5]
Guy Adami: [00:31:03] That’s pretty good. He’s like, Where’s the sausage and peppers, by the way? Great, great job by Franky five angels, as you know. Can I just do something here? It’s sort of. [00:31:10][7.6]
Dan Nathan: [00:31:11] It’s your podcast. [00:31:11][0.4]
Guy Adami: [00:31:12] This is not this is not a rip off the tape. Yeah, I you know, you’re an asshole. I know you’re making fun of me. No you are [00:31:18][5.5]
Danny Moses: [00:31:18] You guys are big time now. Sirius Radio Channel 132 in a world. Go ahead, guy. In a world. [00:31:22][4.6]
Guy Adami: [00:31:24] So again, I’m not pretending to be the brightest bulb in the fixture. Okay, so I don’t understand how corporate finance and all those integration and then spinning things out. This is what I do know. Intel Dan bought Mobileye four or five, what was a five years ago or so for like $15 billion, right? Is that about right ish? 15 point something billion dollars. [00:31:45][21.2]
Danny Moses: [00:31:45] Yeah, that’s. I think that’s. I think that’s. [00:31:47][1.4]
Guy Adami: [00:31:47] Yes. Thank you. Okay. At its zenith when things were great, I think the valuation of Mobileye was almost 50,000,000,000. 5 0. I think that’s true. Okay, that’s. That’s a good deal. That’s a good deal. Remember, that’s from The Godfather as well. Yesterday. This week, Intel spun out mobileye. Okay, so I’m reading Pat Gelsinger’s Twitter account. He put this on Twitter. Now, if you want to @ me and say I’m wrong, have at it. [00:32:18][31.0]
Dan Nathan: [00:32:18] Just to be very clear, he was not the CEO of Intel [00:32:20][2.1]
Guy Adami: [00:32:22] He was not. Okay. He was not. Just to be crystal clear, Crystal, I’m quoting, It’s an exciting day for Intel and Mobileye. He @, Both of those, by the way, does that right when you @ people, we’ve made the strategic decision to unlock the value of our Mobileye business by taking the company public. This decision enables Mobileye to generate more value than is possible as a wholly owned subsidiary of Intel. And that makes sense. Here’s what I would say why you must suck as a CEO. Why can’t you unlock the value of Mobileye within Intel? Why do you need to [00:33:03][40.7]
Dan Nathan: [00:33:03] Well hold on a second, just since he was a CEO at VMware, which has spun out of EMC, which was kind of brought back and forth, it’s just a bunch of fugazy, engineer here. [00:33:13][9.5]
Guy Adami: [00:33:13] And let me ask you this, Danny Moses, do you think McDonald’s and I’m just bringing this up to bring it up. Do you think they rue the day that they spun off Chipotle Mexican Grill? CMG? I would submit, yeah. Or maybe it unlocked the value. But if you’re doing your job right, if you have an asset, you should be able to unlock that value yourself. I’m just throwing it out there. That’s not my rip off the tape. [00:33:35][22.6]
Danny Moses: [00:33:35] That is a Rott [00:33:36][0.4]
Guy Adami: [00:33:38] That’s just me. Am I wrong? No. Tell me I’m freaking wrong. [00:33:40][2.5]
Danny Moses: [00:33:41] No, listen. [00:33:41][0.1]
Guy Adami: [00:33:41] Do your job better. You don’t have to spin it out. If there is value, you should be able to unlock it with the geniuses you have in the C-suite. And if you can’t get somebody else in the can. [00:33:51][9.6]
Dan Nathan: [00:33:51] Hold on this goes both ways, Danny, and you might appreciate this. You look at the some of the parts of Amazon and you see that basically AWS is the entire valuation, their North American retail business is valued at almost negative. And there’s a couple of different ways to think about that. Sometimes it gives you a lot of cover if you’re a CEO or a management to do a bunch of things. It’s kind of like the alphabet, other bets. So if you split up, the companies goes back to good bank, bad bank. At the end of the day, Intel is trading at seven, ten year low, whatever the hell it is. [00:34:19][28.2]
Danny Moses: [00:34:20] That’s correct. [00:34:20][0.3]
Dan Nathan: [00:34:21] You have a fiduciary responsibility to kind of unlock value where you think it exists. [00:34:25][4.0]
Guy Adami: [00:34:25] And my point is, if you’re running a company efficiently, you should be able to unlock that under the umbrella. [00:34:31][5.8]
Dan Nathan: [00:34:31] We could all agree, let’s just say Amazon went down another 50% or something like that. [00:34:36][4.6]
Guy Adami: [00:34:37] AWS is gonna get spun out. [00:34:37][0.4]
Dan Nathan: [00:34:38] It would have to be spun out. Right? It’s the same thing of eBay and PayPal. They split them up. Hewlett Split up. I mean, the like. [00:34:43][5.3]
Guy Adami: [00:34:43] So, so okay. So here’s the baseball analogy. So if you’re shitty enough as a baseball team, let’s just say and you have star players, you got to get rid of them. And I would say, why don’t you keep the star players and get rid of the rest of the shit? But that’s the way I look at the world. Maybe Danny Moses, maybe I’m looking at the world the wrong way. Maybe I’m looking at through the lens of a Sicilian, and I should be looking at the lens of sort of a business person. [00:35:06][22.4]
Danny Moses: [00:35:06] Listen, they’re under a lot of pressure to create this damage and just a distraction, shareholder value, whatever it might be. The stock is languishing. I mean, Intel’s been an absolute disaster. So you’re right, they bought it for around 15 billion. I think when they spun this back out, I think it was around 17, I think. So what can they do now? Can they focus on more of a buyback? Can they do whatever they got to keep paying this dividend? I don’t know what they’re going to do, but they were under pressure. They probably sat around the board, what can we do to please our shareholders? And I guess that’s the thing that came up. [00:35:32][25.4]
Guy Adami: [00:35:32] So yeah, well, it didn’t please the shareholders whose intel still sucks. I know this is it. And I don’t know why I’m dog piling on the intel rabbit because you know, it’s interesting AMD used to exist by the way, I mentioned AMD reports next week so Intel wouldn’t be in Monopoly. They literally the only reason for their existence is so Intel could fly under the radar screen of the SEC or whatever entity governs those things. And Intel got lazy and guess what? The world passed them by and the world is passing by Pat Gelsinger. And Pat, if you’re listening to the on the tape podcast, we invite you to come on and defend yourself, because my sense is you would like to be able to do that [00:36:10][38.1]
Dan Nathan: [00:36:10] I don’t think exactly they got lazy. I mean. [00:36:12][1.9]
Guy Adami: [00:36:12] They got lazy. [00:36:13][0.3]
Dan Nathan: [00:36:13] They mis executed. And it is pretty amazing though that Intel has. $7 billion market cap versus aimed at about 95, and they have more than 2×2 and a half times their sales. So they just mis execute in some of these higher growth areas. And AMD has done a really nice job taking market share. So I suspect Intel, we’re talking about this right now, it’s down to about 26 and a quarter or so. And by the time you’re listening to this, I’ll bet you this thing is down at least ten, maybe 15%. It’s going to be a bloodletting. And just, you know, I mean, when you think about we’re almost a year in from the Nasdaq high, right, which came in mid to late November or so. And you think of the average length of bear markets here. We’re getting kind of long in the tooth and especially when you think about large pockets within the equity market that are down 70, 80% and they topped out maybe the summer of 2020. I mean, so so we’re getting long in the tooth. I’m really expecting a couple more huge capitulations. There’s got to be a couple more alphabet is just careening lower, making new 52 week lows. I think Apple if it were to go head back to those lows that we saw just a couple of months ago, that’s a good start. So we’re seeing relative strength in small caps. We’re seeing the banks. They stopped going down on fundamental news. That’s good news. We’re seeing rates. We haven’t talked about this that ten year yield, which is at that really steep uptrend today at 3.95%, looks like it wants to go back to three and a half. So there’s some ingredients in place here. We’re just waiting for O in the US dollar. And when you think about the dollar’s impact, that’s one thing we’ve heard from all these multinationals this week. I mean, Microsoft results, if the dollar were to come in 5% after the huge ramp, that would also be, I think, an ingredient for trying to help put a bottom in the stock market. [00:38:00][106.8]
Guy Adami: [00:38:00] Lest you think we buried the lead or one of the bigger stories of the week when we come back. On the other side, we’re going to be talking about Tesla and that genius, Elon Musk, bringing a bathroom sink into the headquarters of Twitter and all things Twitter and. [00:38:15][14.5]
Dan Nathan: [00:38:15] Let that sink in. [00:38:15][0.1]
Guy Adami: [00:38:16] Let that sink in. And as I mentioned earlier, a very pedestrian, a very pedestrian Danny Moses will give us his picks for week now is this week eight in the league where they play for week eight. Stay with us, folks. CME Ad. [00:38:35][19.4]
Dan Nathan: [00:39:15] iConnections Ad. [00:39:15][0.8]
Guy Adami: [00:40:40] FactSet Ad. And welcome back to the On the Tape Podcast Guy Adami, Dan Nathan Danny Moses I love my voice sometimes it’s the dulcet tones, sexy of Guy Adami. Now again, Elon Musk can’t help himself. He strolls into the offices of Twitter. I guess that’s out there in San Francisco City. But you were just out there. [00:41:00][20.7]
Dan Nathan: [00:41:01] I was yeah. [00:41:02][0.4]
Guy Adami: [00:41:01] Yeah. With with a bathroom sink. He somehow thinks he’s clever. This is what I tell people. And I’m not suggesting I’m f ing Don Rickles, but if you’re not funny, don’t try to be. Okay. I have moments when people do have moments and they do lol. I’m sure there are people here on. I listen to the podcast that at some point today lol. [00:41:19][17.6]
Dan Nathan: [00:41:20] Here’s one thing that’s funny [00:41:20][0.7]
Guy Adami: [00:41:22] Ha ha funny or quirky funny. [00:41:23][1.6]
Dan Nathan: [00:41:24] When you think about this guy and you think about how much he enjoys being on Twitter and trolling people and all that sort of stuff. It’s pretty fascinating that the richest man in the world is making one of the worst trades that have ever existed. I mean, he’s literally overpaying for something like $20 billion. [00:41:40][16.9]
Guy Adami: [00:41:41] $20 billion, I would submit. Yeah, I think Danny’s right. [00:41:45][3.5]
Dan Nathan: [00:41:45] Well, think about this. I mean, think about how much Meta is down today. [00:41:48][2.4]
Danny Moses: [00:41:48] How about Snap. [00:41:49][0.2]
Dan Nathan: [00:41:48] Singing, about how snap, how much. But well, I mean, this thing is probably a 20 billion at best market. [00:41:55][6.4]
Guy Adami: [00:41:55] So I have a question for Danny Moses. He’s not a dope, so why would he do that? Danny, I have an answer. I think you have an answer because it’s it’s easier, it’s more cost effective. It’s a better trade for him to overpay by about $25 billion, then for him to possibly be deposed and have to answer questions about literally everything. [00:42:17][22.3]
Danny Moses: [00:42:18] It all comes back to his brand and his ego. If you think about just the number that he made up, the same way he made up the funding secured a few years ago and 420 because he wanted to be cut, he says 54, 20. I mean, that’s how made up it was when it happened. But he got himself in a bind and couldn’t get out of it to seven off suit. And he goes all in and someone called him and now he’s buying this thing, which is really I would even say if that stock is 54.20. Dan, if you were to chart that stock and align it where it was trading before all this nonsense happened and where it would be just with three of its peers, it’s probably 20 bucks, probably somewhere in that range. Right. So that’s that for the banks to go along with this to the degree with they are is unbelievable to me because they’re so wrapped up with him in other businesses. Right. And Space X being another one right. Where they’re providing obviously a lot of funding for him and they think he’s going to be a cash cow because they’re going to eat it. I mean, there’s a billions of dollars of losses here sitting here potentially. They’re not give it offload this debt, this 13 billion. They going to sit on the bank’s balance sheet, that’s one. And then the equity investors that he brings in, we have yet to see. By the way, unless I missed something, Dan, how much stock Musk actually sold, if any, if someone provided him another margin loan against the stock, whatever it would be. And then in the middle of all of this, the day before closing, we get a report come out on Reuters and all the other news services. The Department of Justice is involved in an investigation that has been going on for a year on full self-driving. But guess what? They don’t know when they can get to it because they’re competing with two other DOJ investigations into the company. There are three DOJ investigations going on in this company right now, but this comes out after his need to sell stock to close this transaction. So this is going to play out quite unbelievably, but it will be a private company, so we won’t see everything in real time. But Dan, let me just say this before I turn to you. I’m sad because I never owned a Tesla, not because I didn’t think that yes. Was cool or whatever. I actually didn’t trust the car overall because I don’t think that I’m going to have to get parts. I really believe that and so forth. I don’t want to be on Twitter anymore. I’ll stay for a little while. I guess I use my real name. I’m not going to get doxxed. It’s fine. I have nothing to hide in my messages and things like that. But there are people that I’m watching now that are leaving, people that yes, they are Tesla bears, but they’re brilliant people and they are leaving Twitter right now. They make up a huge amount of all the people that use Twitter out there. No, but to me, I’m about to lose a huge community. So it’s upsetting. [00:44:34][135.8]
Dan Nathan: [00:44:35] Look at the a little experiment with Yeezy coming back on a couple of weeks ago. [00:44:38][3.4]
Guy Adami: [00:44:38] Is that Ye. [00:44:39][0.7]
Dan Nathan: [00:44:40] Yeah it’s Ye. I mean the point that I would make, I said this on fast money and it found its way to Fox News one night. I was out mostly as we have. Trump comes back on will you leave? And I was like, Yeah, probably. We’ll have our corporate account for research. Some media will tweet out our content. I just don’t want to be on a platform like that. We get enough crap as it is. We put ourselves out there, we’re on TV, we do our podcasts. People think that it’s open season on anybody who’s got a blue check and listen. You’re entitled to say whatever the hell you want. I just don’t have to play that game. I don’t have to be around. Here’s the one thing I’d say about Twitter and him owning this asset when you think about Tesla. So he’s going to be the CEO of Tesla, he’s the CEO of Space. He’s the chief twit of Twitter here. And he actually tweeted this out this morning. I mean, he’s doing this because he loves humanity and he’s trying to save this as a civilization because they just I know and it just sounds like a bunch of bullshit. But to do that, I mean, he literally overpaid by 25 billion. And Danny, to your point Twitter’s low in the pandemic in March it. 2020 was $20. So if you think about the fact that all of these other peers have blown through their pandemic lows, this thing might be a teenager and he’s paying 54.20, $44 billion. And so everybody says the guy is a rocket scientist. He’s not. He tried to be a political scientist. He’s not one of those either. He might be one of the dumbest. You know, what we’ve ever met. [00:46:08][87.7]
Guy Adami: [00:46:08] A glib comment basically cost him either his reputation and potentially more than that or to your point in excess of 40 something billion dollars for an entity that’s probably worth more than half of that. And it’s really interesting. And that’s what happens when you put your foot in mouth, which I do on a daily basis. Never cost me that much money, though. [00:46:31][22.4]
Dan Nathan: [00:46:31] So here’s the thing, Danny. So Tesla, you know, we talked about this a little bit last week. I know you’ve been short. I was short. I covered it like 209. The stock is at 224. The further he gets in with other assets like Twitter, the more risk I think there is to Tesla and its stock. Look, let’s say that stock continues to go low. Let’s say the value of Twitter continues to deteriorate and they have to spend, what, a billion and a half dollars just to kind of fund that debt they’re taking on to do this deal. You could find yourself as a Tesla shareholder in an unruly mess because he’s getting margin calls all over the place. I think when it goes to 200, where’s it go from there? Because it looks like it’s about to really take a dump. [00:47:13][42.5]
Guy Adami: [00:47:14] The support is 175, which would be about a 58 actually closer a 60% peak to trough decline from its all time high that we made, I think, in November, December, which is remarkable that nobody talks about. So that’s where I think inevitably that’s where it lands, because there’s still so much there’s just a lot of what do they call it, bullshit hair. There’s a lot of hair on that. [00:47:38][23.8]
Danny Moses: [00:47:38] Let me just say this. So Ford news today, let’s look at that for a second. Not a great quarter. Obviously, they have issues in their supply chain. Costs are getting to them. All the stuff they wrote down, a $2.7 billion investment in Argo AI. What is Argo AI? That’s self-driving technology. And Farley came out and said it’s just not possible right now to profitably make full self-driving one because it doesn’t exist. And so it’s going to cost them money. So here he is on one side taking that write down. By the way, Voltswagen also an investor in Argo. So these are two legitimate companies that have tried to do so. Musk in Tesla is being investigated. Remember, the NHTSA is currently has a regulatory probe into it as well. But think about it, they’ve sold this on 160,000 cars, nobody will care, because it’s a 15,000 bucks a shot. Forget about the lives that have been lost. So it’s 2.4 billion, if I’m doing math correctly, just in potential liability. That’s what recalls are. But what will companies do? And what non-product the companies do is do what Ford just did, cut your losses and move on. These guys obviously don’t do that. So to your point of where the stock can go again, I get it. Oh, he didn’t have to sell stock or maybe he did a personal guarantee or maybe whatever. But now that he’s closing on Twitter, he must have done everything that he needed to do related to the stock. So free to buy the stock. What are you buying? You’re buying a guy that just lied to you about endless demand who just cut prices in China two days after they reported the quarter saying demand was still so strong. This goes on and on and on. And it’s funny, I looked at the form force today before he came on just to see if maybe he did sell stock. And I haven’t seen it yet. He didn’t, but everybody else has. And so everybody else keep selling. And the other thing I’ll say is, if this DOJ investigation, what’s going on last year, by the way, they said it’s going on for a year. He sold stock during that time period to claim for his tax bill. Let’s not forget and as recently as this past Monday on the 10-Q did not disclose, quote, have not received any requests from the DOJ on any topic at all since May 2019. Okay. Maybe what they think is significant or not. I’m just saying there’s a lot of subjectivity in here. It’s only going to get worse for him. And on Twitter, we saw what can happen quickly to someone like Kanye, right or Ye. Whatever his name is that happened quickly. I don’t expect this roller coaster any time soon. How much does that translate into his Tesla brand? We shall see. But I think everything’s vulnerable in his world right now. [00:49:48][130.1]
Guy Adami: [00:49:49] On an earlier episode of On the Tape podcast, I mentioned it on and on a great song by Stephen Bishop. You yacht rock fans also. He was in the movie if you were called in Animal House, number one. Number two, Ford would have been better off buying the screenplay of Argo, a great movie with Ben Affleck in 2012. I won’t say, ah, go fuck yourself, but you know what I mean. [00:50:10][21.6]
Dan Nathan: [00:50:11] Academy Award winner [00:50:11][0.7]
Guy Adami: [00:50:13] Ben Affleck. I love Ben Affleck, by the way. I know a lot of people don’t. I happened to that’s one of the people that if I had a chance to hang out with him, I would do it in a corner here. You suspect that’s good job by you guys. [00:50:24][11.2]
Dan Nathan: [00:50:25] Okay, guys, just a little breaking news here. It’s Thursday on the close and Amazon just comes out. And I’m trying to go through the numbers here, guys, but the stock is down 20%. The implied move on this one was about 9% in either direction. It looks like an absolute bloodbath as I’m kind of looking at the. Current quarter and the guidance. It’s both it’s just not pretty here. So we have three of the four apples due out a little bit. But Microsoft alphabet now Amazon all disasters, all double digit moves to the downside. Danny, thoughts here because we spent a lot of time talking about rotation. Can the market really find footing if these businesses have basically inflected whatever relative strength that they were seeing because of their moats and their monopolies and their managements and all that sort of stuff? It seems to be out the window right now. [00:51:13][47.7]
Danny Moses: [00:51:13] Yeah, I’m looking right now through their free cash flow decrease, their income decrease. I’m looking for layoffs. Remember, they laid off 100,000 people over the summer. It’s not a small amount. And I’m seeing if they’re saying anything there. But listen, shipping costs are high. Inflation is getting to them. They don’t have necessarily pricing power, remember? Right. They kind of pass it on. So obviously they’re getting hit here. So I’m just looking in real time here. But again, if you had shown me this, this was going to happen and where the S&P was going to be. So FAANG is dead or FMAGA or whatever, that’s over. So now we got to come up with a brand new acronym of Caterpillar, McDonald’s and all these other things. So what I’m looking for the new Ackerman here, Dan, as I look through this. But yeah, my first take is you’re right, that’s a massive move. And, you know, it’s one thing to be down 17% or 20% when you’re $1,000,000,000 company, when you’re wiping out tens of billions of market cap in period of seconds and minutes that we’ve seen these large companies, you know, that’s something to behold. And that’s something that’s a lot of damage out there. Regardless of what the overall stock market is doing. I would say. [00:52:08][54.9]
Guy Adami: [00:52:08] Amazon is a margin story. It’s always been a margin story for me. Operating margins came in at 2% this quarter. A year ago, they were 4.4%. The street was looking for 2.3%. They just reported a third quarter, their fourth quarter guidance operating income. Just listen to this for a second. This is their guide zero, which is nothing to $4 billion. I mean, you could drive a truck through that. FactSet numbers were $5.05 billion. You can do the math. You take the midpoint of that and you’re talking about a guide down of roughly 40, 50, maybe 60%, which is a staggering number. So we’re obviously be watching this very closely next week. As I mentioned earlier this is week eight in the league where they play for pay. Danny Moses is a pedestrian. 11 And I now what he’ll tell you is at 11 and nine, you’re still making money. I will say to you that given the season he had last year, 11 and nine is an embarrassment. But there’s always this week to get back on the right side of the ledger. Danny So without further ado here, your NFL picks, please. [00:53:15][67.1]
Danny Moses: [00:53:16] Before we came on air, I talked to Dan. We’re back to even for the year we’re going to bury it’s over he doesn’t he just dumb with this on [00:53:22][5.7]
Dan Nathan: [00:53:22] We’re going to do a workout here I can’t do it anymore. [00:53:24][2.0]
Danny Moses: [00:53:25] And we we go to L Molino on the nights with our friendly bartender. We can always make bets with him there and pass around hundred dollar bills. [00:53:30][5.3]
Dan Nathan: [00:53:30] That’s right. [00:53:31][0.2]
Danny Moses: [00:53:31] So I was going to take Baltimore. I’m just going to say this right now. I’m betting on Baltimore tonight now that they’re getting to. But what scared the crap out of me is that line opened up against Tampa Bay Thursday night game. Baltimore was minus one and a half. They’re now getting to dinner that Tom Brady hasn’t lost three games in a row since 2002. I think that’s what’s going on here, but not one of my picks and I’m not going to put it out on Twitter so I don’t get credit for it. But I just want to you know, I am betting Baltimore plus two tonight. All right. I’m going to keep writing the Cincinnati Bengals on fire. I told you two weeks ago when he got back to New Orleans, back to the Superdome, whatever they call it now, he would find his rhythm. Joe Burrow, they’re going to destroy Cleveland on Monday night. Cincinnati laying three in Cleveland. Dawg Pound will be doing by halftime. All right. I like Cincinnati. They’re you’re Giants guy. I know you’re scared. I know how Giant fans are right now. I know it was a rough week. [00:54:18][47.2]
Guy Adami: [00:54:19] Wait a sec. Hold on a second. Do me a favor, please don’t bet on the Giants. [00:54:23][4.2]
Danny Moses: [00:54:23] No, it’s not Dan betting. It’s me betting on the Giants. Okay, it’s me, all right? I know they’re going out west, but it’s better than a west team traveling east east teams travel west is fine for the time change. Giants plus three. I’m going to ride him now. That’s probably bad for you, Guy. Until I see some getting three in Seattle. I’m not a believer in Seattle. I’ll take Giants plus three and I’m going to stay on Tennessee versus the Texans. Tennessee came through for me last week against the Colts, lay in two and a half they’re going into Houston and playing. I like Tennessee. So Tennessee minus two and a half. Giants plus three, Cincinnati minus three. I saw some three and a half out there on Cincinnati. I would buy it two, three when I wasn’t playing out there. And I’m taking Baltimore for fun this year. Those are my picks Guy. [00:54:59][36.3]
Guy Adami: [00:55:00] Before Dan chimes in on whether or not he wants to for you and you guys out there, they’re looking for a good line at a bar. I will give you the following. You walk into a bar, you see a pretty young lady and you say to her, Are you from Nashville? And she’ll say, Inevitably, say no, and she’ll say, why? And you say, Because you’re the only ten I see. [00:55:20][20.1]
Dan Nathan: [00:55:23] They’re like I said, I’m not taking the other side of Danny. He’s obviously very good at this. I was just kind of willy nilly taking the other side of stuff. We’re going to do a little bit of a work out here. But Danny, all the best here. All right. Is that it or are we done here? Guys, that was a heck of a week. [00:55:35][12.5]
Guy Adami: [00:55:36] I’m done. I mean, just so you know, folks, on Monday, we’re going to be doing a special release of the on the tape podcast. We’re going to have a bonus episode, a bonus drop, as they say. We’re going to talk about all things earnings this past week, all things earnings in the week that we’re going to talk about. It’s going to be great. Tune in. We’re obviously going to do our market call, which is we do. And we’re going to try to talk Danny, Moses, Vincent Daniel and Porter Collins into doing what do you call that thing? [00:56:06][29.9]
Danny Moses: [00:56:07] What are we doing? What are we doing? [00:56:08][1.3]
Guy Adami: [00:56:09] What are we doing? [00:56:09][0.4]
Danny Moses: [00:56:10] That will be out a week from Monday or recording a week from Monday, I should say so. [00:56:13][3.4]
Guy Adami: [00:56:13] So stay tuned, folks. We’ll see you next week. Thanks once again. The CME Group and I connections for sponsoring this episode of On the Tape. If you like what you heard, make sure you hit, follow and leave us a review. It helps people find our show and we love hearing from you can also email us at on the tape at risk reversal. Dot com any time. Follow and connect with us on Twitter at on the tape pod and we’ll see you next time. [00:56:41][27.4]
Dan Nathan: [00:56:42] On the tape is a risk reversal media production. This podcast is for informational purposes only. All opinions expressed by me and Nathan Guy, Danny, Danny Moses and any other participants are solely our opinions and should not be relied upon for specific investment decisions. [00:56:42][0.0]
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