tv Fast Money CNBC February 13, 2012 5:00pm-6:00pm EST
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>> we wouldn't miss it. >> that's right. >> thanks for stopping by. it was fun having you around. >> it was a pleasure. see you back at the ranch. >> that's it for "closing bell." >> "fast money" starts right now. i'm melissa lee. here are tonight's top three trades. makes the case and also get the bears take on why insider selling is a reason to be cautious on the stocks. plus the largest company in the world closes above $500 a share. is it too late to get into apple? why he thinks buyers beware. and means some of the big guys will get out of the game. kelly has a scoop on how managers like lewis bacon are dealing with dodd frank. this is "fast money." let's start trading. get straight to the story in apple. karen, do you regret selling
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last week? >> i don't. it's a question for portfolio management as it gets too big, the risk award changes. i don't regret it. do i wish my stocks were worth more? always. >> that did not happen. i was on the floor of the stock exchange. i mean, it happened but it wasn't because apple -- when i was down there there was no confetti thrown. >> so there was small advertisement. >> we did not sell all of apple. but it's the right thin to do. >> we're showing a false animation once again. i agree with karen in the sense of you want to be long apple. it's not binary where if you say we sold some today it means we don't think apple continues higher. yes. as it continues to march higher, you have to evaluate your risk. a lot of what i have done, i own the 495 calls. now only shorts and put spreads which i think in apple's case and the case of other names,
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wouldn't put that trade on. but with apple, there's such quiet volatility in a sense you can make that trade. >> this is the largest market cap company in the world right now. when you think about it, the stock's up 10% in about seven trading days. it's added $50 billion market cap. it's bigger than microsoft and google combined. the excitement is about a potential for a dividend announcement. heck. there's your dividend. you just got $50 billion fop me at these levels and there's a lot of excitement and whatever. i think it sets up for a potential disappointment that you head into this meeting. if you don't get that dividend announcement. >> let's go downstream a bit. i hope you did your valentine's shopping for me already. >> i'm done. yeah. >> i was done a long time ago. >> that means she didn't even start. excellent job. broadcom is a name we've talked
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about on the show. up for october. then had a drop into january. treaded down to 27.5. then here we come right back up against. post earnings, which were good, the stock again trading to 38.5. now you have to ask, has broadcom come too far too fast given this double top? again, the downstream names have worked, but you have to be concerned that broadcom seems to have trouble here. maybe it's time to take money off the table. >> other names when you look downstream, a little bit of a stability performance in the last couple days. that's a name you want to own. which we talked about last week. pulled back. getting a bit of an attempt here as we say to stabilize once again. i don't know if you want to play with that name. the last name to talk about here because it is victim of the apple system is rim. and rim continues to trade poorly.
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you have rim now sitting below 15 bucks. i still think rim goes below ten before it gets above 20. >> what do you think in terms of multiple that apple deserves? right now it's trading in line. that's with the cash and the stock. if you take the cash out, then i guess it's less. bertha coombs who was covering for us today said if you take the multiple of other market giants way back when, oracle, ge, so on. that was like 25. so you put 25 on apple at this point, that would be, you know -- >> wait. apple right now is 11, not 25. >> i'm saying if it was -- >> microsoft was nearing -- >> in the heyday. >> cisco back in march of 2000 topped out at the market cap at
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the time it was trading north. it went to probably under a hundred billion. so when you think about it, i mean, we know how the story ends for these names. >> and it also looks like in 2012 you'll get expansion which blends well for apple itself. >> apple continues to chug along and others have struggled lately. is this an overall red flag for the market? doug, i know a couple days back you said it's an nba market. nothing but apple. it also has a downside. >> right. i think if we remember bob ferrell at merrill lynch, he told us in market rallies we have to be intentive. and we are starting to see a market that is far too focussed amongst games. particularly apple. i'm not referring to jeremy lin.
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i'm referring to nothing but apple. >> hey, doug. you were one of the voices that came out. you mentioned a lot of technicians. and you were looking for a move where we are now. you've been spot on so far. now everybody seems to be getting sufficiently lubed up. is it time as we reach levels we last saw in may to sort of take money off the table in the market? >> yeah. i think we see sideline cash coming in. most indicate a substantial rise in bulls. we saw one of the largest increases in net long exposure of the hedge fund community. we've seen three weeks of investors depositing money into domestic equity funds. investors association of active investment manageables and stock tradeables are with the highest
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levels. and as mel just mentioned, ribini is now a market optimist. i think we have to start looking -- apple concerns me because of the market's dependency upon it. it is starting to move semi-par bollicly. and this is not a good sign. we're starting to see in the stock index weakening. and then of course there's a bunch of read indicators on apple. dan mentioned that the market cap of google and microsoft is less than apple's. and if you look at the key vendor rivals, apple is worth twice what they're worth. and finally there's a handful of competitors left. 17 in total. they still have less than a hundred billion dollar market cap short.
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and apple shares charted against the moving averages unprecedented. probably not sustainable. >> it's joe. it appears as though you're looking at an overall market call here for a correction. you've got financials up close to 13% here in the xlf. would you shoot against that? maybe take shorts out in the financials? >> i'm still long the xlf and selected banks. i would tend to focus on the nasdaq. i think dan had a tremendous blog today in which he mentioned the deterioration in the number of new highs. we only had about 185 new highs today. if you go back to may, the reading closer to 1200. before the collapse in july it was over 800. so this shows the dependency on apple. i would tend to look at the
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deterioration. >> good to speak with you. doug kass. nice words on your blog. >> apple right now makes up about 4% of the spx. 10% of the xlk. when you own other things, you don't have to own apple to have exposure to it. your ira that sort of thing that you don't keep a close eye on. >> as apple investors wait on a dividend decision, let's get to slow trades. compiled a list of those stocks that managed to rain through dividends. the list includes an energy name, utilities no surprise. health care, no surprise. emerson is one that you have been looking at outside of the dividend. >> comes in about 3.1%. so this was a fantastic story in basically the beginning of '09 and 2011 when the stock went
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from 25 to 62. since then we've seen more than a bit of a selloff down to 40. but seems like the stocks on the next leg up. through earnings. reported the first quarter. wasn't great. the guidance wasn't great. but i think the valuation was such enough where this one might be worthy of a look. if you think the palin is taking off from here, emerson 13 times earnings might be cheaper. might be time to get on board that one. >> this is not one of the stocks that consistently raised dividend. >> had to take a breather. but i think we will see a dividend raise. and here a little over 2.5%. i won't be surprised to see it approach 3%. >> on the list lltc. certainly a name to own. has the owners girth as well as the dividend increases. a name not on the list, the 52 week high today again.
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seeing continual earnings growth. >> let's move on to our next trade. >> don't laugh at me. >> it's valentine's day tomorrow. i mean. >> absolutely. >> okay. >> guys going to be shopping all day tomorrow. >> can we talk about victoria's secret? you shouldn't. that's a bad idea. you rookies out there, don't. the gift is more for you than it is for your wife or girlfriend. so get something that piece or jewelry. don't get a gift that's yours. >> have you had that thrown in your face? is that what you're saying? >> i read all those magazines. the "vanity fair" is fantastic. >> i'm taking my wife to see guns n roses. >> let's move on to our next trade. your bank of america speeds ahead up 48% holding above its average. up 2.5%.
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last week we asked is the worst over for bank of america and we seem to be powering higher and higher. >> i do think it is. and i think the short trade has ended in the financial space. we just asked dougie kass would he short financials. the answer being no. it goes back to the xlf again. i think the top ten holdings within which i think is cheap here as well. i think these are all names that you'll be comfortable owning. that there's no holes in the fundamental themselves. the xlf's a trade. but the short trade is over i think. >> what did the options look like? bank of america? >> bank of america continues to be -- there was a call seller. people play savvy towards the end of the year. they bought the january, february, april calls. you see people peeling out near the $8 level. i think a lot of people think it's going to take a pause at
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least as far as the options market is concerned. got to take a break. coming up, from the cloud to the home builders, lots of movers. and a trend not found on fundamentals. it says the market could be headed lower. straight ahead. with a new view of the market, you could see an investment opportunity you didn't see before. fidelity's next generation ipad app lets you see what's trending around the world, as well as what over a million fidelity customers are trading throughout the day. and advanced charting lets you customize your views and set up your own comparisons. our ipad app can help refine your strategy or even find a new one. i'm velia carboni, and i helped create fidelity's next generation ipad app. it's one more innovative reason serious investors are choosing fidelity.
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welcome back to "fast money." live at the nasdaq market site. masco missing on the fourth quarter. nine cent loss versus what was expected, a five cent loss. the ceo saying they are entering 2012 with cautious optimism. maybe a bit conservative. it is a miss trading lower. >> look at the gross margins. big miss there. operating margin 1.6%. i think last quarter was 6.1%.
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and it was, i think 1.9% this quarter last year. so they're getting squeezed somewhere. so if you see weakness at home depot on the back of this -- i'm not saying you will, they've been a monster. given the other five year high i think we made today. listen. i still think valuations are reasonable. so any potential weakness in hd off the back of this should be bought. >> we are seeing it trade lower in after-hours. armstrong. 52 week high back on february 3rd. south of $50 here. if there is vulnerability tomorrow, i think this is a name that you definitely want to pair down your holdings. it seems to be at lofty levels. >> let's check on shares of rack space in the after-hours session getting a pop. beating the street with the quarterly sales as well as
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earnings. from hosting to cloud services has actually now up 21%. the cloud versus what it was about a year ago. which was less than that. is this a name you follow? >> everyone's in the cloud. everyone wants to be in the cloud. i mean -- >> literally. >> business isn't nearly as sexy. when you traded 60 times earnings, you better get somewhere that has real growth to it. to me this is one where there's probably high short interest. >> dan just hit the nail on the head. this is a 14% short interest. given this price right now is an all-time high. my sense is a big volume day tomorrow. shorts throwing in the towel. i don't think there's any way if you have not been in this name to go racing in tomorrow. i think it's more function of people getting squeezed. wait for lower prices. frankly i think i'd be waiting for the lower prices here.
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>> they're changing the manage hosting segment to dedicated cloud to get a little cloudier. >> little cloudier. >> they've emphasized their way to be more cloudy as dan said. but i think you need to understand the significant portion of their revenues still is manage hosting. they're moving more twords a cloud story. i think it's a name when you look at it you go do i want cloud exposure? i don't think that's where you get it. i think you look at a name like ffiv and you're going to get better performance there. >> all right. let's move on here. our next gres says raising red flags for this rally. and the next move will be down rather than up. mark halbert joins us now.
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always a pleasure to speak with you. >> thank you. >> why should we put much stock into the selling? >> they haven't always been accurate. but they've been right more often than wrong. if you go back to 16 hurkss points ago which is why i refer to a 1600 point drop. that was in early october. they were far more on the buy side than the sell side. now it's the opposite end of that extreme. in fact, they're now selling relative to their buying at the same pace they were last july which we know was before the bottom dropped out of the market in august. no one is saying the same thing will happen. unless insiders improve their sentiment, the betting would have to be that the market's at a high risk area right now. >> let me ask you something. i don't know if you consider company buybacks to be similar to an insider. is that data you look at? i'm seeing a lot of buybacks announced and implemented.
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>> there's a lot of data on the buybacks. you have to net out whether it's just increasing or decreasing the supply created by option exercises and so forth. looking at announcement of buybacks which is actual number of buybacks that the companies execute on. i've not seen any research that looks at buybacks and insiders together to see which one of them may be more revealing. but it is true that a lot of companies are increasing buyback activity. i think because there were so many months if not a couple years there after the bottom of the market in late 2008-2009 when companies rain shower holding on to any cash they had. there's probably some pent up demand there. by that same demand, that same pent up would have been there. and an alarming sign six months ago. probably today as well. >> and six months ago obviously the market was significantly lower than we are now.
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just so we understand everything, you're talking about -- most of these insider selling programs are very defined. very significant. you see some acceleration of insider sell selling. given the run-up in the market. >> the data by the way -- is from a service. they look at the ration owes of insider. it's now selling eight sells for every one buy. you go back to the late september, early october period. the ratio of selling to buying has increased by a factor of about ten since early october. >> all right. we're going to leave it there. thanks for your time. we appreciate it. mark hullbert. if there are particular people out there that time well. >> i don't look at insider selling as buying. there could be a lot of reasons
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some sells. age, planning, whatever. they only buy for one reason. so i don't look at it as much. >> i absolutely agree. i also think there's a seasonality when selling occurs. i think the relevancy is exactly what karen said. it's who's buying and what level they're stepping in. >> coming up next, anticipation for hunger games is heating up. i know guy is preparing his tent and sleeping bag when the tickets go on presale. >> what's wrong with that? i saw the hint of sarcasm in your voice. i was going to take you. forget it now. would that be a valentine's gift? not anywhere. >> after gains this year, should you still be hungry for lionsgate shares. >> did you make that up? >> i did not. plus trading the greece austerity plan through currencies.
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welcome back to "fast money." we are live at the market site on times square. on january 24th we spoke with lionsgate vice chairman michael burns. here's what was said after the interview. >> it's pushing towards ten bucks. people will say what now? later than a year ago. but i think at ten bucks it's still worth a look. and they're going to get squeezed. i think it's going to continue to go higher. >> three weeks later and the stock has rallied over 17%. but taking a hit today. now what? >> i think friday we saw a huge stock trade north of 12. downgrade today.
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so it's probably due for a pause. but the wall street journal spoke to people at trisinda said he might be interested in a film company, production company. nothing obviously set in stone. but lionsgate could make a lot of sense for a lot of reasons. if you get a pullback in the stock which you should now given the run we've seen, i still think this is a name you want. >> let's take today' pullback. >> listen. when i say pullback. where's it trading now? this was a $12.26 on the highs on friday. if somehow it can magically get back down to $10.50 or so, that's where you grab it. >> a blowoff top trade. that's what really happened here. i thought earnings on thursday were not that good. earnings were in 44%. that's not what the streak is looking for. yet you had the stock rally. all those guys who said were short in essence got the bad
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news they were looking for and the stock didn't respond. those 3 million shares go all the way up. look where it is on monday. 11.42. i think if you were playing it from the long side, you've got to be concerned with the price action. >> let's move to the next trade here. the dollar is back on the defensive as risk appetite was given a boost after the greek parliament approved austerity measures. what's the risk on currency? first of all i wanted to get your take on the events over the past 36 hours or so. does it really mean that greece -- the greek problem is in the clear at this point? >> it doesn't. it's a step in the right direction, but there's still more headlines and deadlines coming up. they're supposed to review these austerity pressures that greece produced over the weekend and sign off on them. we're still waiting for the psi agreement on the debt swap deal to also get the go ahead. there's a lot of things up in
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the air still that need to be finalized. another market focusing in order to get answers. >> you are looking to sell at this point. are you looking to sell aussie. >> they just had a meeting. i am looking to sell the australian dollar. what's been happening is i think on wednesday we'll get positive on thing. what happened in australia was the rba was supposed to cut rates. they actually did not. australian banks raised variable rate mortgages. this puts more pressure ahead to cut rates even further than thought. and that will weigh on the australian dollar. on wednesday after getting announcements on greece as i mentioned, intershort aussie trades. i look for a move down to
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welcome back to "fast money." we're live at the nasdaq market site in times square. our next guest says the fundamentals could push the momentum above 15,000 in two years and potentially 50/50 chance of hitting 17,000. let's bring in jeremy siegel author of stocks for the long run. which is in it's fourth edition. great to speak with you. >> thanks. >> this is obviously based on long-term historical patterns. there's certainly a lot of statistics that were cited in the article. but if you were to cite one grouping, what would be the most convincing to show 15 k in the next two years?
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>> i think the most convincing argument for dow 15k is based on valuation. we are below the long-term 15 pe ratio. we are well below the average. so certainly we did data showing in the last -- if you have not done well in the last five years, then you have two out of three chance of getting very good returns up to dow 15,000 by the end of next year. but for me, i like the valuation story just as much. i think if the two reinforce each other, then you have a great chance. >> you're calling for 15,000. at what price level the the dow would you say your thesis is incorrect? where's your point of reference, your risk management to it? >> first of all, dow 15,000 is
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really rather modest. it means 8% more this year and 8% in 2013. so it's actually only slightly above long-term normal appreciation for the dow. i mean certainly it would be a good return in these low interest rate environments. my feeling is that this year i see momentum building in the economy. and i think this year at the end of this year we have perhaps 50/50 chance of reaching dow 15,000. i think by the end of next year, i think it's probably close to 70% or more. nothing is sure in the market. but we can base it on past behavior, probability, and valuation. >> if the economy heats up a little bit and interest rates move up a bit, does that make you change your model to have a lower pe ratio on higher
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earnings? or what happens to the model in a slowly increasing environment? >> good question. what we find is at the beginning of the tightening of the fed, find the low interest rate. that is no problem for the market. the problem comes at the end of the cycle. so i can see the fed abandoning. i personally believe they will not be able to hold rates extraordinarily low until the end of 2014. i think they will abandon it, but i don't think that's going to harm the market. because a stronger economy, greater growth and profits will overwhelm rates. >> given doubled in march of '09. effectively three years. what's the risk reface here? and is there potential downside in the market? when i say downside, 15 to 20%? . >> i think again, and i think
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the ecb essentially put that off. a lehman type event in europe that rolls over into the u.s. i mean, that is e the big fear. that sparked the biggest bear market in 70 years in 2008. and it's not out of the question. we know that they're moving towards a solution. and i personally think the ecb will provide the liquidity like the fed did after lehman to prevent anything from going down further. but, you know, that is what i think is the residual worry for the market. >> all right. professor siegel, thanks for joining us. we appreciate your time. jeremy siegel of the warton school. you asked a good question in the scenario. if we believe the fed will abandon that policy prior to 20 sh which they had laid out, that might be applying the ointment so to speak. are you concerned about it despite what professor siegel said? which it is not a problem.
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>> i don't think a slowly rising rate -- a slow rate environment is problematic. a shock where rates spike up, that's problematic. >> the other thing interesting to me, if he thinks the dow names could be up. there's other places you'd rather be to get a better return. >> like what? >> well, just like maybe some smaller cap things or just some more beta in a way. when you think about what's in the dow, it's at&t, intel, microsoft. there's a lot of stuff in there. at the end of the day, i don't look at the dow. guy probably quotes it all day long. but to me -- the old timy guys here. there are other places you get more bang for your buck. >> how about you old timy? >> obviously apple's a place that would -- you'd want to look that will be significantly
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higher. listen. i think the islanders are going to win the stanley cup this year, but they're not. >> 50/50 chance? >> what i mean by that is it's okay to say the dow is going to 15,000. and i agree with everything he's saying about the fundamental improvements in the economy. what we do here is risk management. you've got to know where your downside is. and we weren't able to get that answer. i find that problematic. >> for awhile we've been saying 1350. here we are. the market doesn't give you this long to sell the highs. i agree. so we make one of these tops up to 1370. if we can't close below that may high for a couple days, then we're probably going to see that 8% move. otherwise you've got to be very careful up here. we're sort of into nosebleed
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territory. i think it's late in the game. i don't think the game is over. but right now you're a bit late. >> next right here. lewis moore bacon. didn't have a great performance in 2011 along with many other hedge fund majorers out there. he along with others are required to provide details to the scc. kate kelly is here with more. great to see you. >> thanks for having me. >> what is he planning on doing? >> the thing is that moore is most likely going to register with the scc. i think the documents they are supposed to send are en route as we speak. that said, louis bacon is apparently considering the family office which is of course a more small scale. what did at the end of last
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year. though they didn't have to return much outside of capital. required to under dodd frank. this first isn't incredibly revealing. it's what's the min million. basic stuff like the coordina s coordinates. but later in the year, funds that manage a billion dollars or more is going to have to reveal things about leverage, strategies. these will be revealed by the scc and the strategy. but of course there are fears in the hedge fund community that this information could leak out at some point. >> why would there be fear about revealing this? i would assume by the time you file it, it's old information anyway. there's an element to the -- you're not revealing anything in a very timely fashion. >> right. so there might be a couple
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months lag time or whatnot. i do think ultimately this will be updated quarterly. this is information that here to fore has never been published. we know documents do occasionally leak out when it comes to things reviewed by regulators and things that might be newsworthy. i think it's not an unwarranted worry. that said, it's a new era. >> let me ask you something. what is the criteria that would make one have to register? if you're just running friends and family, what's the threshold? >> if you manage $150 million or more, you have to submit this initial round of paper work due on march 30th. and anybody who manages a billion dollars or more is going to have to register the more juicy stuff essentially. that deals with things like
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leverage, certain investors. things like that. >> thanks a lot for joining us. >> welcome back, kate. >> good to be here, guys. >> classing up the show with a heretofore. >> there is more on our website. >> karen, is this a concern of yours? >> we registered. we beat the bullet two years ago. you just have to do it. if i were in the position of bacon or carl acon. why do i need the hassle of running other people's money? it is a bummer to lose other people's money. worse than your own. >> and to reveal how you lost it. >> you know. we need to anyway. but that's a lot of stress. if i had billions to run on my own, i would. >> i like the idea of taking 2% on billions. >> he was taking 3%.
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shipping stocks have been on a roll. up more than 20% so far this year. so what is behind the move? is it too late for investors to get it? let's bring in dennis gartman. always nice to see you. >> it is always great to be seen. >> which names do you still like at this point? >> first thing you have to understand is the baltic freight index is down. people talk about the rates down that much. and they are. they are indeed down that much. but it's an interesting exercise to see the fundamentals are lagging well behind what stock prices are doing. and that's something that investors need to understand. that happens many times. shipping shares are starting to move up rather dramatically. they're doing so on big volume. they rip to the upside. and yet the baltic freight index is under enormous pressure. there's plenty of move to go higher. don't be surprised if you get a correction for a day or two.
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but these are stocks you need to own for the longer term. >> why is there great diversions between the stocks and the baltic? >> we have a circumstance now where we're bringing enormous ships on the market. and not just enormous numbers of ships, but enormous ships. in the past, a container ship that might have carried 3,000, maybe 8,000 teus as they're called. now ships carry 15,000 to 18,000. we need to scrap old ships to match the ones coming onstream. that's putting pressure on the baltic dry and the baltic containership rates. and that's been a very disconcerting circumstance for the shipping shares for a long time. now we're seeing shares move up before the baltic freight index does. >> one of the reasons these kind of industries can move so much is the leverage is gigantic.
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you have rates that start to move. they gain all of that to the bottom line because the costs are fixed. it's a volatile space. do you -- each sort of individual category is different if you look at shipping oil versus dry versus lmg for example. is dry where you want to be? >> i think right now i want to be in dry bulk and containers. soon i'm going to want to be in tankers, i think. right now i think i want to be in dry bulk and the containerships. those are the ones i want to look at. that tells me that circumstance are turning for the better. right now the action in the shares tells me that's what's going on. i want to be there first. tankers later. >> give us a couple of stock picks before you go. >> the two that come out are genco and diane ships. pay attention to what's going on and buy any breaks you get. >> great to have you.
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good to see you. >> always good to be had. >> you got him to do it anyway. >> genco calls interestingly that was a name that carter braxtonworth came on last week and he singled it out with more upside. >> and dennis also mentioned diana. and the calls in both of these names were really hot today. genco calls were traded about six times what you normally expect. and diana, the options really caught a bid. option implied volatility increased 12%. it was 12 times what you would expect. there was just huge buying of diana of the calls. for the reason dennis pointed out. they're afraid there's going to be an ugly giveback day people don't want. >> when you look at the space and you look at dry shippers, it's also a macro call where
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you've got shorts stepping in. genco is one of the most shorted shipping names out there. they're not making the macro call in the space. a lot of the unwind going on right now with short sale is covering. >> we've got to hit some "options action" here. you're looking at pepsi. >> that's right. big dividend yield. the options are usually really -- i can use that yield to buy a long put if i'm long stock and protect the investment. i can pay $2.50 for the january 57 put. 3.2%. essentially i'm using that dividend to pay for the put. and i get a free look to the upside. >> catch more "options action" every friday at 5:00. follow us on twitter to get trade updates. coming up, it's a beauty stock in an ugly investigation.
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taking action on a number of european sovereigns. downgrading. italy of note is also a downgrade with a negative outlook. they're also adjusting their outlook for austria, uk, and france moved to a negative outlook. action from moody's. i don't know if we can look at the s&p 500 in the wake of this. italy getting downgraded with a negative outlook still. and we are seeing the trade here just about flat. >> you were marginally off this news. i am long the euro. in a range between the moving average. you're obviously using those as point of references. i think it goes higher. >> we've got your first move tomorrow when we come back. [ male announcer ] there's been a lot of talk about the chevy volt lately.
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