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tv   Fast Money  CNBC  May 6, 2013 5:00pm-6:01pm EDT

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night. apple continued its come back and powered the nasdaq up higher. up 14 points. thanks for joining us. >> always a pleasure. fast money starts right now. >> i'm melissa lee. betting against buffett. doug kass gives us his big lesson investors. correction ahead. black son strategy head out with a warning while she thinks the bulls may be running for cover. we're tapped into post game analysis with bryan kelly, steven p grosso. we want to set the record straight and play a little fact
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or fiction. with three beliefs that seem to be pervading the market right now. he says this is a low maintenance bull market. all the bulls want is for the feds to continue to buy $85 billion a month. now we don't mean to pick on mr. jorduro jar denny. >> when you look at some of the big economic number, they weren't great. but the jobs numbers were good enough. and the fed's still buying. i personally look at those numbers and think $85 million a month, i would agree. it's a dangerous place to be when that's hall that you ca care about. >> it's all about bet. you've been forcing the
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equities. it's going to continue until ben takes his foot off the gas. >> corporation sheets are not better. >> no. they are better, but the jobs number last month was more endowse. ism hasn't been great. when you compare it to the global economy, the united states looks better. >> let's move on to the next one here. this one is from goldman sachs. cyclic cals are undervalued. >> i'll have to take their word for it. i'm not privy to that information. but i will take their word for t i don't know if that's a bullish or a bearish, i guess what they're saying is that seemingly bullish for cyclicals, but i'm not convinced of anything right now. i don't even know what a cyclical is in this world to be honest but. >> wouldn't a cyclical be something that's going to ben frit from an improving economy? >> take a look here.
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technologies, consumer staples. >> so it makes you wonder. the four years that we've been rallying, that's the question, right? are we ral eyeing for the right reasons. to their point, it doesn't really matter. i think unfortunately, i'm guilty of this. we try to make this game more difficult it than it needs to be. market wants to go up because they're forcing you into the market. and hopefully we're smart enough to point that day out. >> davis research was calling it the shuts, right? we had the staples, and we were seeing a row station out of those names. we're seeing weakness in that area. these are companies where -- >> does it matter? >> yes, no one can deny that the rotation is happening, but it usually happens for two to three
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weeks. we've seen this type of rotation before, but maybe not to extent we're seeing it now. >> if the economy isn't improving, these sick clickal names have to participate. if you look at these, they're paying -- >> do you believe the economy is doing better. >> i do. >> you should be in cyclicals because those parts of the market should catch up with the rest. can you forget about the economy part of that equation? >> you can't forget about europe. look at what happened to the european stock markets. what everybody was talking about is really the weakness in the revenue. a lot of it was driven by europe u the cyclicals are going to do
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well. >> what, i'm listening to all you guys. i have no idea what i'm going to to here. on the one one hand you're saying that you can't fight the fed. on the other hand it sounds like you want to fade this rally. >> i have to fade the rally. i want it to fade. the bottom line with this market, you just can't buy it blindly. if you're in something like a p and p, you're in utilities, you want to look for areas that haven't rallied yet. i bought mexico. i bought brazil, some of the emerging market areas. mexico's highly sensitive to the american economy. >> i'm staying long in my utility, i'm getting my beat on from apple. >> nibbling on sick clickals. >> crude is at the upper raid of the trading range. i expect these to reverse. >> i actually added to my
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johnson & johnson. i added to it today. it was the first 1% down day in a while. but this stock is at all time highs. it's very expended on valuation basis. it's not considered cyclical. so there's my take. >> the market says the economy is a lot better than it truly is. i don't think the economy is nearly as good as the market says that it is. we mentioned blackstone, which has had a tremendous couple weeks. and names like home depot to continue to work. because they work. and this is the perfect housing market for hd right now. >> let's go on to the last market myth. bonds are terrible invest. s now. you're on the other side of the trade. >> i'm long bonds, long tlt and treasury futures. anybody who says you can't fight the fed and then goes and shorts bonds is doing the wrong thing. this is what they're buying. they're buying all the supply
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out there. not only that, it acts as a real nice hedge. if you're worried about a spike in interest rates, that's going to be a problem for the stock market. so these are tandem trades. >> you have to own some bonds. it's not great to fight the feds. it's not great to fight warren. if we going to say, if you own them, i through you stick with them. but i don't think you have to add to them here. and that's what i think mr. buffett's going to say. >> and his time frame's a lot different than my time frame. do i think five years from now interest rates are going to be is he tame rate? probably not. >> and if we docome back a week from now, for a trade they're going lower. i'm not smart enough to know where they're going to
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>> a settlement today with mbia may be a turning point as traders start to see some mitt kbags of the mortgage liabilities. the settlement may be for less than 2 billion but it resolves one of the stickiest and longest running disputes. buying countrywide, a deal that only cost about $4 billion at the time has brought with it some 40 billion and counting in mortgage liabilities, related to the high risk loans that countrywide underwrote, helping to spur the financial crisis. b of a has spent years.
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a judge will rule on that important chunk of those settlements later this month, adding further clarity to the big picture. but in the meantime, investors are appearing to be cheering the pro yes, sir for the embattled bank, even if its effect is to give b of a's first quarter earn beings a 10 cent haircut. >> mr. loski it's a pleasure to have you with us. why do you think they took a stake in the company? >> it's positive for both the bank, bank of america and mbism a. we've been negotiating this for more than a year. it represents a lot of exposure for mbia. it gives them ha path forward. they were really in some bad trouble there for a little while. so we feel really good about the deal for both sides.
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and frankly for the financial markets and for the system. so why did b of a take a stake? you'd have to ask them. i think it was a complex deal with a lot of moving parts. and i think it was a smart deal and the right way to go. >> two quick questions for you. one is do you think this sets any sort of precedent, and does this make a meaningful symbolic progress and secondly, what would have happened to mbia if they had not been able to settle today or sometime in the very near future? they would have been taken over by your department, yes? >> potentially. they were definitely getting very low on liquidity. and usually when a company gets that low we consider putting them into what's called rehabilitation. it's a form of bankruptcy for insurance companies. and the state, the department of financial services would end up running the company. and, look, that is never a good
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outcome. and here we were able to avoid it through what i think is a smart deal. a fastbchmbia. >> it has been separated and the litigation resolved in favor of mbia. >> yeah. it was resolved in favor. and the remaining litigation basically goes away between b of a&m bia. so that goes away between them and the put back litigation goes away. to answer your earlier question, i think it does set something of a precedent in terms of trying to resolve these matters. i think it's a good day for b of a. i think it's a good day for mbia. anytime you can resolve something together with reason and carefully, it's better than resolving it through litigation.
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litigation goes on and on and on. it is a totally inefficient way of resolving things. and life is too short. and we need to move on. and companies need to get on with their business plans going forward and not get mired in the past. so i think it's a good thing for both companies. >> last question here. of had mention thad this puts mbia in a path forward. does that mean in your view that it has taken off the table the previous fath had been on, which kpo have been this rehab taegs under your department? >> well, look, they're getting $1.7 billion today. they're also getting a credit facility. that takes them out of the realm of insolvency going forward. so i think, life is uncertain. and we'll see where things go in the future. but today is a good day for mbia. and i don't think any one is
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talking insolvency today. >> kate, you're still around. it's interesting to see the reaction. no surprise the bondholders are breathing a sigh of relief. it sounds like as he said insolvency is off the table and perhaps mbia can get back to business and start issuing insurance on new deals. >> i think this clears up uncertain uncertaintie uncertainties. i spoke to one analyst, and i says knew some of these issues are out of the way they're really going to try to do well with their municipal finance division. the first thing they want to do is get a higher credit rating, hopefully a single-a. and then they can go out and get more business and build on any wins they have there to try to increase their size and scope. so that's a bull story in the
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view of some analysts. and certainly we've cleared up uncertainty on the structure side as well. >> it shows why it's impossible to be sure of specific names in the market. this this was a 13% shortage. stock was uppen. it rips the faces off these shorts. rdn that jim cramer spoke about, a valuation level, rdn makes a lot of sense here. not a 45% move, but you might see a similar rally in that name. >> i had to think of bill akman today. he's trying to do the same with herbal life. bup it's very treacherous to get into that trade. >> before we head to break. let's get a check on some after
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hours movers. i'm not sure if this is the market close data. >> it's unchanged. >> check this out. coming up next, where traders stand right now. and the big lesson cass has after arguing his case against warren buffett. out of the way.
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i think it's tradeable. i think you could ride this thing back up to 500. >> apple is up 10% in just the past week. >> i'm still staying long on the name. i still think you can ride this up to 500. >> now to google. on that same day, the traders also took their positions on that. take a listen. >> i think it still slow and steady. i think at the end of the day it's going to be higher. >> i think it's a sell. google right now in my opinion, this is a one trick pony. >> google is up 7% in the past week. so guy had that one spot on, as he likes to say. will press higher.
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>> doesn't seem to be anything impeding their progress higher. i think a lot of people shot against it. it's a volatile stock. 860 or so. so yeah, i think it can push toward 900. >> let's go for more on the economy and the markets. the head of external relations at blackstone. you're skeptical of this market. why is that? >> i think if you look at bond markets, equity markets, they're trading at all time highs. we've had about 17 weeks of inflows. and as we look at opportunities in private equity, stock markets look expensive in the u.s. and so we're looking elsewhere. >> so people today might look at the bmc deal and think oh, we're back in business on the mna front. you don't see it as that. >> there's a lot of liquidity
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available for deals. so you could probably get enough debt to do a $10 billion transaction. can you get enough return for your investors while still paying a premium to the market which is what you'd do in a typical public to private. we're buying small companies and adding onto them. and we've done that in the refinding space. we've done it in building materials and other areas. >> when you say expensive, can you get a little more granular? percentage wise, how expensive is this? >> so i don't know what we're at a peak. so in terms of looking for a pull back. and if you look at market multiples, 15 seems pretty reasonable. but when you think about economic growth, there are some positive signs. so housing is up modestly. employment numbers are better. consumer confidence is better. but we're still not seeing
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earnings growth, anything materially above just a couple percentage points. and that makes it a bit diceyer. >> it sounds like the companies you're getting involved with are the more cyclical companies. so it sounds like you are defensive on the market as a whole, but you're looking for bar begans in the cyclic am segment of the world. >> we're looking for companies with good brands that need something else that we can provide beyond capital. so it could be for example in europe, buyingen lica camera who wanted to exnand asia. we could provide the network and the capital to do that. or it could be buying something that's really out of favor. so not necessarily cyclical, but refineries. we're able to buy that really, really cheaply. we're looking at energy broadly around the world. we think that's a long term
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trend where we can invest a lot of capital. >> so is the flip side to a market that is near peak valuations, is it a good time to exit? >> if you think now versus a year ago. absolutely. you're seeing more exits. and where it makes sense, we've taken a company, we've taken it, increased it. markets are absolutely receptive. so we've taken some companies public. sea world, pinnacle was right behind that. you're starting to see movement in real estate. you have buyers who want to put capital to work. and there we have a model of buy it, fix it, sell it. there's absolutely a bid for that. >> on the real we state front, is there no concern that, on the
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exit side of things that everybody will see the perfect time for an exit at around the same time and therefore flood the market? >> so our approach, if you're referring to the residential market is differentiated. we went out and formed a company, invitation homes. we've moved $4.5 billion of capital to buy homes. but in each case we invest about 15,000 fixing them up. we've hired thousands of people to do that. and rather than having someone sitting in new york deciding to, you know, buy a house in las vegas, we really have trestreetd on the ground. so no one else has been able to do it in the same organized manner that we have. >> thanks for stopping buy. we should note that joan will be at the simon conference here in
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to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] go to market flash with josh lipton. >> the solar panel maker swings to a 755 million. the ceo talking about the balance sheet additions. rye affirming 2013.
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short interest, 30%. >> you see that chart there. most of the gains have been made in just about the past month. and that's when first solar had its meeting. >> they did. and they were able to have the luxury of having an accounting change where they were able to pull future earnings into today's dollars. it has a huge short interest. and to guy's point, we have to be very afraid to sell a stock short with this huge shortage. so i would still be out of the name. no trade for me. >> let's move on to the next trade. berkshire bear. did he make a compelling argument? and what lessons are the take aways with his 101 with buffett.
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doug kass joins us now on the line. have you rethought any of your thinking now that you had that one on one directly with the oracle himself? >> no, i haven't. i feel as strongly as i did before. the stock was up only about 1% in a very strong insurance take despite bet he than expected numbers after the close on friday. which benefitted from low catastrophic experiences in their insurance gains. >> part of your thesis, obviously, is that there is only one warren buffett. if he's out of the picture. if he decides to retire, something like that -- >> that's correct. >> then you have an issue. what about something like a jamie diamond? now he seems to be j.p. morgan. do you have the same type of view with that stock? >> no. not at all. jamie doesn't pull the strings
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that warren pulls, both with regard to the invest. portfolio and buying companies, preferred with attached warrants. >> that was jamie diamond. >> yeah. jamie doesn't pull the strings. >> will his successor actually have access? will they be the investor of last resort in the next financial crisis? >> that was one of my questions whether with him gone and the loss of the buffett, would he be able to get those deals. and his response was basically that, yes, i will be gone. but replacing my persona, will be a huge amount of capital, and we will continue to be able to buy things very quickly. i'm not exactly sure if i agree
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with that. >> real quick, anything in the market internals tell you that we're getting close to a top? or is this thing still full speed ahead. >> i don't know. i'm a bad person to ask. >> we'll leave it there. doug kass of sea breeze partners. >> i hate to talk about mr. buffett's demise, but that was the crux of his thesis against berkshire hathaway. what happens when warren buffett passes away? we asked this question about apple and steve jobs too. there's a pipeline. there's a pipeline, things will be okay. and now we're at the point where there's no steve jobs here. and we don't know if they can invent the next big thing. >> it took a year. and it was an amazing bubble. i think the best question that doug asked mr. buffett was that. these deals where he generates
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all this alpha on that portfolio. you're telling me that all those banks and companies that sold to him at these horrible terms are going to, without mr. buffett, they're going to let his successor cherry pick them? no way. >> first, blackberry's of come back creating sparks. dan and guy will square off. goi. like offering schwab etfs tdd# 1-800-345-2550 with the lowest operating expenses tdd# 1-800-345-2550 in their respective lipper categories -- tdd# 1-800-345-2550 lower than ishares tdd# 1-800-345-2550 and vanguard. tdd# 1-800-345-2550 and with all our etfs commission-free tdd# 1-800-345-2550 when traded online in a schwab account, tdd# 1-800-345-2550 it leaves our investors with more money to invest. tdd# 1-800-345-2550 something they've come to count on with us. tdd# 1-800-345-2550 so as investors continue to set their portfolio goals high, tdd# 1-800-345-2550 we help keep their costs of investing low. tdd# 1-800-345-2550 give us a call and open an account today. tdd# 1-800-345-2550 carefully consider prospectus information, including tdd# 1-800-345-2550 investment objectives, risks, charges, and expenses. tdd# 1-800-345-2550 request a prospectus by calling schwab at 800-435-4000. tdd# 1-800-345-2550
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welcome back to fast. we are live at the new york stock markets. shares of blackberry soaring this year as a cheaper version may be coming. guy is our bull, dan is our bear. >> dan is a smart man, attractive man, but he's often wrong when it come does street fights. the demise of the z 10 proved to be false. now the blackberry 10 has over a hundred apps. 70% of them are specific to them. over a hundred apps.
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the growth has been 70% in the last few months. and moist of that is specific to blackberry 10. lack at their last release. the gross march swrins were spectacular, which means they're run being the business better. which is remarkable for them. that's why -- >> 37% short interest. here's the thing. those margins that got better in that last quarter, that was the sell in of the new devices that they just put out to all these different carriers, okay. so that's probably as good as it gets from where i'm sitting right now. the z 10 that you talked about is the galaxy and iphone killer. when think report their q1 in late june we're going to see that this is not selling. it this is a qwerty keyboard. this is not -- >> how about the r 10, which is
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supposed to be the lower version? >> they're not even selling the z 10. people are focused on iphones and android phones. i don't think this is going to make it as a sole independent company. >> what do you say? >> i'm going to go with my friend at risk reversal. i did a little beat on the street research. >> when entailed what? >> i was walking around new york. there was an apple store which was jammed. there was a blackberry van. >> a van. are you serious? like a mini van? >> no, one of those nice sprinter vans. it really caught my eye. the problem was they were trying to show people the new blackberry, the q 10. >> did you go to that van? >> i walked right past it, and
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so did everybody else. >> it doesn't matter about new products. doesn't matter if palmpilot has a van order of protection doesn't have a van. >> palmpilot. >> you cannot sell that stock. >> you know what? we can ask our viewers who they thought won the street fight. yes, you can tweet us using either hash tag bull or hash tag bear. you have to tweet to @cnbc fast money. do you know guy has 250,000 followers? there's not a chance anybody can beat him. >> warren buffett warning about bonds. >> i would have productive asset the. i would favor those enormously now over fixed dollar invest. s. i think it's silly to have some ratio like 30 or 40% in bonds.
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that will change at some point. and what it changes, people could lose a lot of money if they're in long term bones. >> but another invest. giant saying rates are going to remain low and bonds are a good long term invest. . who's got it right? >> d dennis, where do you stand here? >> i took a position being short of the bond market. i'm doing it in a rather unusual manner. i'm buying the ten year, selling the knob spread. i'm short the very long end. i'm long something in the middle. and if the bond market starts to go down, and i think it's going to. it's actually been almost a year and a half since we made new highs. we broke hard on friday. the employment numbers gave you an outside reversal date of the down side.
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i think you've set it up pour the end of the bull market in bonds. i think you've started the beginning of the bear market. long something less. it makes it a little less, you have a little less exposure to something unusual happening over a weekend. where if something were to happen in the middle east, bonds were to fly, you could lose a lot of money. >> the federal reserve doesn't do a mandate. they have to have inflation above 2%. and they need to get the unemployment rate down. and they're going to continue to pie these, for the foreseeable future. so why are you fighting the fed. >> i'm not sure it's a terrible fight of the fed at this point. they are the one buyer. they've needed other people to be buyers for a long period of time. and the fed has told us, if we start to get the unemployment rate to get under 6%. if the inflation rate gets to be over 2% they will step back.
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the bond market's the second smartest. the bond market understands the fed has been there. and the propensity for the fed to step up and increase its presence is reduced. the fed is clearly not -- i shun say clearly. i don't think the fed is going to ram up up their purchases and increase the size at all. and i think the bond market has priced itself into increased purchases by the fed. i don't think that's going to happen. >> dennis, good to see you. >> disney shares closing up. look at whether tomorrow's earnings could push the stock even higher. much more fast straight ahead. ig toward all your financial goals. a quick glance, and you can see if you're on track. when the conversation turns to knowing where you stand, turn to us. wells fargo advisors.
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2013 has been a goodyear for intel. the stock is up 16%. and rbc capital market says it has more room to run. joining us now is doug freeman. great to speak with you. there you are. >> i'm over here. >> doug, first of all, i want to ask you about, because most
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people's reaction to this cause, including my own, was that it's late. i mean, intel for the past month is up 14%. so no why now? why not a month ago? >> you know, i would actually admit it is late. the reason it's late is i needed for the ceo transition to be a little bit better of a known entity. i really wasn't comfortable standing in front of an invest. review commit eye trying to tell them with any conviction that the board wasn't going to bring in an outsider, change the spending strategy, really change things at intel from the outside. i file like a change from the inside is going to be for the better. i do think there is change coming. i think that change can make people perceive intel in a better light. >> you're confident that that ceo will make the right strides? how is that going to happen? because getting down that path could take, could take months, could take years. >> i would argue it's already taken years. >> okay. >> we've seen intel probably
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back in 2010 talk about needing to get their atom based processor. that's their low power processor, to the leading edge technology. this is where intel has the greatest advantage and they can deliver consumers the best power performance. now that's not going to happen until 2014. just this morning i attended a web cast where they showed their newark tech tour on 22 nan meter technology that really does put out some leading performance per watt and the performance that consumers care about. >> does the mcafy transaction effect it? >> we put a $29 price tag on it. that's 12 and a halftimes my numbers for next year. and i remind you, those numbers have numbers below where the street is. it really is a gross margin
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story. driving those gross margins are absolutely some software, strengthen the datacenter and getting a perception for that multiple on having some success on mobile. >> we're going to leave it there. thanks. let's talk about disney. the company is due to report earnings tomorrow. traders are seeing some magic here in the stocks. what did you see today? >> well, you're absolutely right. iron man three had a great weekend. and so the stock had a nice day. and option traders think that the good news is going to continue through earnings, call volume was almost twice the put volume. and these were buyers. the viability in disney options was up 8%. biggest line was the may 67 half calls. lot of those traded for an average price of 48 cents. so that break even is 69.98.
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this is the only way to get longest stock in front of earnings. and give than it just made a 52-week high, it's really the only way to get stock that is so extended above the 50 and 200 day moving average. >> i'm going to break some news. he's doing hawaii again in october. jim cramer mentioned it today. the way to play disney is to buy it after they report earnings. you've seen it a number of times. they report, stock sells off. you buy it then. >> coming up. what is hot and what is not on the old west coast. >> what is hot? this. what is not? maybe a computer on your face. and as we speak, the senate is voting on something that could cost you more money. we'll explain that after the break.
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>> your online tax holiday may be over. it's supposed to force online retailers to collect sales tax. ebay wants that raised to 10 million. and the bill could face opposition in the house. so who knows. >> amazon, any trades here? >> they've done test march can hes, based on where they are collecting sales tax. it really has had zero impact on it. so if you're going to be selling amazon on this news i wouldn't be thatfy. >> google glass. cool. discrete. you could be online and nobody would notice. a tech correspondent demonstrates. >> you toggle through the menu like this. >> yeah that's pretty cool. >> it's great because no one knows you're doing it. >> that's from saturday night
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live. of course the funny part what is when he sdintsly accesses porn. i have yet to see any of them out and about. i have not seen one pair out on the street. >> closet glass users. >> wearable computers. the sign that the apocalypse is upon us. like right? >> they got to get rid of the seizure move to stop your computer. >> it's a dorky look on you. but the product, the look is amazing. >> we can't even get people's attention with their smartphones. now they're going to have glasses on? >> i want to see ha in an anlist report. finally, whole foods reports earnings tomorrow. and it's profiting from americans eating their pets, chi yeah pets. they're the rage of health
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conscious people. they have one more benefit. listen. >> pooping is not a problem are for me. three, four times a day, easy. >> that may be my favorite sound bite of this 24st century so far. and you can learn more -- not about pooping, but about chi yeah seeds. >> you have no need for a chi yeah. no need. >> that's why i have issues with general mills products. >> imagine what chi yeah seeds can do. >> you tweet it. we trade. let's get some of the tweets to our trades.
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>> hold or sell into earnings ramp for green mountain coffee? >> i think a huge short interest here. you hold it into earnings. potentially looking to get 65 to 70 in terms of price. it's risky here, but i think you might actually see a move like that. >> is price on to earnings at 730677 730. >> we got your first move tomorrow. we come right back. stay tuned. everyone's retirement dream is different; how we get there is not.
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>> domino's pizza is a buy. >> i think your short disney is a trade. >> follow me on twitter. make you money. i'm here to level the playing field for all investors. there's always a bull market in summer and i promise to help you find it. "mad money" starts now! hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends, i'm just trying to save you money. my job is not just to entertain you, but save you money. call me, 1-800-743-cnbc. how do you buy stocks of companies that you know

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