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tv   Fast Money  CNBC  October 23, 2013 5:00pm-6:01pm EDT

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nasdaq gave up about 22 points. pulling back from yesterday's all time high close at 1746 with a decline on the day of 8.25 points. my observation returns tomorrow. "fast money" begins right now. have a fantastic night, everybody. >> live from the nasdaq market site in new york city's times square, this is "fast money," america's post market show. timing the trade. it is hard to sell the winners and buy the losers in one of the best trades in recent memory. when doves cry. is it possible that the fed could actually be more hawkish than dovish? we have got that call and how to trade it with deutsche bank's
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top economy. >> stay bullish, my friends. we're breaking down the technicals on the record breaking rally. traders today are here. let's get straight to our top story today and that is timing the trade. after four straight days of all time highs for the s&p 500, stocks took a breather today with energy leading the declines. is the rally running out of steam and should you be taking profits or perhaps getting defensive? guy? >> there is is a really good opportunity to take some profits here, specifically in the broader market, we would have somebody here to talk about the trade. i do think we need to trade down. the move has been dramatic and too quick. where would i specifically take profits? i think western digital has been on an amazing ride. you go back to may when jim spoke at the conference and said one of his best short ideas was
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western dig. both of those stocks are up 40 or 50% since. he doesn't time these things particularly well. the pc cycle has been declining now. the space has been kmodtized. >> the number of new highs in the s&p 500. today the number was 34. that may not seem alarming unless you compare it to y yesterday and the day before. with 32 only, 34 only today, b.k. srks th b.k., is that concerning? >> the market had a different feel today. if you look at the earnings reports they are starting to deteriorate. we're running below trends there. you're also seeing revenues going lower. the comments from ceos aren't that great. and i know that has been the story for two, three, four years
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now. and also starting to see from the currency markets the fact that qe really doesn't have the impact that it used to. it's really -- >> everyone is saying the large ones are going to -- margins are actually pretty strong. i think this is a very stock specific and sector specific situation listen to honeywell and ge. that bodes very well for johnson controls or emerson electric. i thought under the surface and legal reserve was actually a pretty decent result.
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this is very company specific or stock specific. i think the company, some companies are doing quite well. >> karen. >> i agree with stephanie. i'm certain that i'm a horrific market timer. if i like the story, i'm going to stick with it even if it gets a tad expensive. i can't trade around it. i can trade around the hedge a little bit. buying puts or selling puts. but not on my long side. >> right. so let's take a look at some of the stocks that we were willing to sell here. steph? >> it's been just a gem of a story. it's up 160% year to date. i looked at the quality of the earnings. fourth quarter numbers looked like they were better than expected. they were just in line. gross margins didn't rise
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enough. fiscal first quarter guidance was soft. i don't think this is is a disaster by any means but i think they needed a real strong clean beat and raise. and i think you just take some profits. >> you have two other sells on the desk. we do want to go to our guests here and the message is stale bullish my friends. craig johnson is senior technical strategist. great to see you. >> thank you for having me on the show again. >> so you think roughly the s&p 500 should rise another 100 points from here to year end? >> absolutely. i think the evidence is pretty clear and the market is sending us a pretty solid message. think back to what we have seen so far. four set backs in the market. we had concerns about a war in the middle east. we have had concerns about potential deficit and a budget deficit issue in the u.s. we have had a rapid rising interest rate, all of which the market has been able to overcome
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and set a new high. in any given year in the past that wouldn't have been the case. when you think back to history and what history is telling us, when stocks rise in the face of bad news, that's very bullish. >> in terms of the technicals, what specifically are you seeing that makes you -- you listed a lot of fundamental reasons but what did the charts tell you? >> well, in this month's piper jaffray informed investor, we highlighted a couple key things. we looked at a chart, looking at a ratio of gold versus the s&p 500. when we go back and look at that chart it's done a really good job historically, signally major turning points in the market, which is very important for traders to recognize whether we're trading at an uptrend or a longer trend market. that ratio has recently violated the support line that had been in tact since about the 2,000
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time frame. the second thing that we mention is that when we look at the overall season alty of the market, november, december, they are typically strong. but when you get a very strong september like we just saw this year, greater than a 3% return and we have only seen 20 of those post to 1926 that you set yourself up for a strong q4 and i think our 1850 number is pretty achievable based on what history is telling us and the stocks are telling us. the best relative and the laggards are historically defensive names. i think that's going to continue. >> craig, brian kelly. so two charts that i have been going around and trading the last couple weeks are the comparison of this mark to the 1937 market and this market to
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the 1946, 47 market. almost exact matches. when you look at what happens over the next six to 18 months you see a tremendous drop in the market. very similar to what's happening now. what's your view on those charts? >> when you go back and look at the longer term trends we have seen very strong pushes up in the marketplace. we can -- as we get into 2014, i don't think that this pace of acceleration is going to continue. i do think we can hit 2,000 on the s&p 500 next year. but this year it may do some backing and filling but still, 2000 is achievable. >> i know open table is is a name you said you are looking to sell here, which makes sense to me given that story can probably become ubiquitous. but these huge short interest names, they have come in in line and these stocks ripped to the
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upsite. is there a chance that they open? >> you know, there is a possibility that that could occur you will see that you violated an upstrend support line that has been in tact for the better part of a year. it is starting to stumble a little bit at the 50 day moving average. when stocks start making lower highs and stumbling, i start to get a little nervous. and i think open table really needs the whole support where it's at. otherwise we're setting ourselves up for a retest for the 200 day moving average. >> all right, craig, great to see you. thanks for your time. craig johnson, piper jaffray. the other name he says to sell is groupon. it is official, carl icahn made a killing by selling netflix. his timing could not have been better. here is what the fast money traders had to say on that big
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move. >> i think the story is still in tact but i don't think it's the place to start initiating long positions. as a trader, it's very hard to initiate a long position. >> i have been dead wrong on this. guy talked about this internationally. they cut deals there. this is why the stock is trading at a massive premium but it's priced in. >> if i were carl, i would buy some puts. >> nobody would say carl, what are you doing if he took some money off the table. >> if i were carl, he has got to wait until he has owned it a year. it is so much better from a tax standpoint. >> well, of course, it is hard to sell the big winners. we have got some names here. stephanie and guy already gave their sell. what's on your list? >> for me it's price line. just like what carl did here you very rarely can see the fundamentals changing before the stock prices do. i tend to use a bit of technicals when i'm getting in
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and out. it looks like price line is an extreme level. trend lines, channel lines, on all of those measures, price line is starting to go parabollic. >> it's just a technical view. it's not that things are improving in europe? >> i can make the call that the global economy was probably hurt by what happened in dc. things may be slowing down. but that is a supposition. until you actually see knit in e earnings, it is going to be too late. >> karen? your sell. >> it's really more of a portfolio management issue than it is me not liking the story any more. i like the story a lot. the stocks up 116% give or take for the year so the position is now twice as large.
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i have to take some money off the table but i still very much believe in this story. i think we are seeing the space move. >> the rates have come down since september or so? tremendously. 30% or more. >> but they were off -- that was a big bump off the bottom. if you look at where the rates are off the top, they are down a ton. there is a lot of room to move. rates move a little, profitability moves a lot. >> learning to time the trade. we are looking at one of america's favorite stocks, microsoft. shares are up 125% so far this year. do you buy more or sell out ahead? and caterpillar taking a beating. the ceo says his balance sheet is bullet proof. we will find out what the traders have to say. that and much more fast straight ahead. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading.
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♪ >> a market flash on f-5
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networks. dom? >> that's right. we have got a couple of the big movers. the shares were solidly to the upside and now they have reversed course after the computer networking company and cloud services company reported earnings in sales and announced a $750 million stock repurchase program and of course the outlook came in and that fell short of estimates. there is f-5 estimates in the business of computer networks. it also said current quarter sales would be higher than analyst expectations. those shares moving to the upside. back over to you. >> thanks for that. what's the trade here? >> people are going to come running back. people at home will know what that means but you have no clue. the running back part. i incorporated the rolling stones time is on my side into my response. you have no idea.
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way over your head. right over your head. >> back to the topic on hand. >> the quarter was fine. we have seen moves on the downside. it's going to go down tomorrow. the quarter was solid. i think the stock will be higher a week from now. wouldn't be surprised to see the stock north of 52 sometime next week. >> let's talk about one of america's favorite stocks, microsoft, gaining 27% helping to drive the s&p 500 to record highs. how should you time this trade ahead of the company's earnings report tomorrow after the close? karen? >> i don't own it even after last quarter, i think it wasser theial results like they all blend together. there is somewhat of a floor here on the hope that whoever the new ceo is will be an excellent choice. i don't know that there is too
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much downside here. >> i say sell it. i'll say sell it. could you get a ceo pop if you get somebody of a high caliber in there? certainly you could. but the company has -- no product innovation. their core business is declining. people are buying it because of the dividend at 3. 3%. that's fine. the investors are bond-like investors. you get any type of volatility, they will be the first one out the door. >> jeffries came out saying there were a couple positive catalysts, first a new ceo and also the possibility that the company could break itself up into a better co and an other co. >> i hold on to it here. even when you had that terrible news, that's where it stopped on a time. the break up story has been there before. i don't know if that's why you're getting into it.
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you're not going to get crushed owning microsoft. i don't think there is is a lot of downside. at this price, 33 and 3/4 -- >> the break up probably doesn't happen until you get a new ceo in the seat. even if it's at the end of this year, you have to wait to see what his or her strategy would be. i agree when you have so many land mines in technology, these guys probably kind of just sit around here. maybe it's dead money but dead money in tech is not so bad. >> if they do find a great ceo and you get a great pop you have got to look for the kitchen sink quarter where the new ceo comes in, lowers the bar for themselves. >> because you should. >> why not. it's a free pass. >> let's hit a buzz kill. caterpillar digging itself into a hole. the company citing weaker demand for mining. take a listen to what the ceo
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had to say about the state of the company earlier on "squawk ". >> our kblebalance sheet is pre well equal. i have seen cycles off and on over my 39 years. this one is pretty acute in mining. the rest of the business is hanging in there. >> it's great that the balance sheet is bullet proof. it sounds like the company can't forecast what its customers will be doing any time soon. >> the income statement does not seem to be bullet proof and that's a big deal. they missed a lot on credibility. when did they see that this quarter wasn't going to be good? the beginning of this year they guided for $8.75 for this year. they are now at $5.50. this gives you an idea of how hard it is to short. one other thing, the company pays their executives part of
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their plan with a strike of $3.50. that's the bar that they need to pass. that's kind of irritating when they have a stock that trades off of an expectation that was 8, now $6. >> i always thought that cat in the low 80s is interesting but it's a trading stock. you have got obviously massive credibility. i thought it was interesting that joe global was in the green most of the day today. the company reported about a month ago and they beat estimates. they also announced a buy back program and they will buy back 20% of their float. if you want to play this space which is kind of dangerous to do. that's the one i think you want. >> is this a cat specific problem? >> i think a lot of it is a cat specific problem. construction?
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they saw huge stocks. to your point is they don't know what their customers are doing. at least you get a little better visibility with joy global. >> it has been a rough day for corning, shares plunging. but does the uphill battle to achieve profitability make it ripe for a takeover? let's bring in bob, building products manager. >> nice to be here. >> you say in an lbo situation, owens corning, that it could warrant the 48 bucks a share? your price target is $47 a share. >> we like the outside of the oc story and in the short term we don't see a lot of movement for the stock. but in the right hands with the gradual recovery in earnings growth and the potential to generate a lot of free cash flow, the company could warrant a takeover. >> who would buy it? >> private equity.
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our general view here is you're going to see a cyclical earnings recovery, and there is a lot of free cash flow available to pay down debt. in the short term there is head winds. according to what management said today. the global composites business is facing an intensely competitive landscape. we don't see a real catalyst unless somebody is willing to consider an lbo transaction. >> knowing everything you just said negatively about the core business why wouldn't private equity wait until it gets to the 20s and try to scoop it up. >> the one thing the company has is a tremendous tax shield. the earnings they are making are not being taxed as a result. so we think there is a floor on the stock. the question is it has trailed dramatically. what can management do given slack demand to get earnings
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growth? we don't think the end market are picking up. we're much more enthusiastic about those attached to increase new construction. >> just looking at, this would be probably a $7 billion deal. that's a pretty decent deal. that's a big deal. >> and say you have extremely low and attractive financing levels. you have a lot of prooeft equity capital. so if you're looking for a company with strong underlying assets that will behave better, that can service strong free cash flow at buttes, oc checks all the boxes. >> they also reported weak volumes. does that concern you?
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>> in the shorm term it's an obvious head wind and i totally agree with that. we are very bullish. the question is you have three businesses in the portfolio. it's difficult to get it at a 2% or 2.5% gdp growth. when are all three businesses going to work? you need all three working to see really robust earnings growth that some are already starting to experience. >> pulte out. does it beet? >> we like the story. we don't feel strongly into the print. we also like mohawk. >> guy, what's the trade here? >> they report on halloween. look at this stock. it has been a huge performer that nobody talks about. on october 31, you can see the stock continuing to rally into earnings.
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i like mhk, as he does. >> you think it is a take-out? >> he makes an excellent point. but the problem is it's the only thing they have going for them. there are better plays in this area. take a look at toll brothers. holding 30, high end residential. i like that. >> if you bought amazon over the past year then you are very happy. is now a time to take your money and run? then are materials hazardous for your portfolio? the sector takes a small hit today. (vo) you are a business pro.
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welcome back to "fast money." we have a report of net loss in sales that beat analyst estimates but said that current quarter sales would fall well short of wall street expectations. its head of sales and chief financial officer would both be leaving the company. >> guy, you just listed wdc in the same area. >> they're in the same world. you want to connect the dots? be my guest. but nothing really good here. i don't know if you can make a straight line but, again, when this space becomes kpodtized and you are hurrying. >> what's another stock that has been on a run? amazon near all time highs ahead of earnings tomorrow. time for a good old fashioned street fight.
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stephanie is the bull, guy is the bear. steph, kick it off. >> it's a top tier play on e-commerce. we know that. cloud and mobile and digital is all in their favor. 28% unit growth and gross profit of 30 to 33%. that should do it to keep the stock okay. the key is going to be guidance. i think the fourth quarter sets up pretty well for them on revenue acceleration because of the season alty, game and console cycle. i'm not going to try to tell you that this stock is cheap. i'm looking for growth technology and this is one of them. this might be the quarter they pull the rug out. steph meant 17 times price to book, all those things. they are highing 70,000 seasonal
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workers which is up 40% from last year. they better hope that this christmas or holiday season performs. margins have been good. watch out on the downside. the company says the low prices are important to get customers and keep customers and the street is giving them all kinds of slack. remember they still don't make money. at a certain point the street is not going to cut them the slack that they have. maybe this quarter we will see. i'm not so sure. >> in a world where companies are reporting negative comps if this company could put up 20% revenue growth that is impressive. if it does sell off it will return. >> i want the verdict from brian kelly. in an internet growth stock do we care about margins? >> so far with amazon, nobody
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has. nobody has cared abmargins or earnings. they keep doing what they're doing i'm going to be with guy on this one. i think everything is priced into the story so all you have is downside. >> i know you're with guy. >> it has been a show me story for years. >> we want to know who you think won this street fight. in the meantime, you know, it's easy to upgrade the winners and downgrade the losers so we want to highlight the call today made ahead of the curve here. it is all call of the day and it is a downgrade. lowering rate from an underway to a neutral.
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>> i don't think so. particularly because if you look at the valuation, it is trading at a one times tangible book to many of the larger banks. i thought the earnings were actually pretty good. and obviously so did the market with the shares up two to three% on the day. what is important is they are doing an aggressive restructuring in their thick business and at the same time the global wealth management piece starts to kick in and that gives you better visibility. >> shares of tesla tearing up this year but it took a hit today. we have got the trade. the doves might just get a surprise if janet young takes over the federal reserve. policies could be more hawkish than expected and how your investments could be impacted next on fast.
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>> welcome back to "fast money". another couple of big afterhours movers. angie's list, the stock is
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taking a beating. marketing expenses were up over 8% from the same time last year. earnings were in line with estimates. it has agreed to sell its market making business. and as part of that deal, etrade has promised to send 70% of customer stock orders and route it to a newly owned unit for at least the next five years. some deal making action. >> thank you very much. let's get to angie's list. we actually had the ceo a couple months ago. it's up more than 50%. >> since the summer it has been lousy. i don't know about anybody's list. nobody wants to be on angie's list. they got a push tomorrow but you might finally get that
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capitulation date. >> is this the way you want to invest in the retell investor? >> i thought it would have cracked long before this. if you get any type of pop on this thing, take your profits in it. >> let's move on here. praising her earlier today. take a listen. >> i understand 90%, 95% of what they're writing. but there is is a small amount which i don't know and i want to know and i often found that i would go to janet when i didn't know it, she did. and she explained it to me and i thought that was very helpful. she's a very bright lady. i think she will surprise everybody. >> but could the surprise be a
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less dovish bet? joe, always good to see you. >> happy to be here. >> why would you think that? >> partly because the committee is changing. we're going to lose a lot of doves neck year. there are already a couple of openings that need to be replaced. two more come in. so they are just fewer doves. so by default, the average weightle moves more to the center. it's less dovish. and to some extend, perhaps she does not want to, you know, she doesn't want defense. it's possible that people will dissent. that may force her more to the middle. because there are so many openings that need to be replaced, president obama might go with the sam plan he did when he passed the last two which is
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is a republican and democrat, powell and stein. stein has been. >> and hawkish relative to the rest of the committee but those people coming in are likely to be neutral. >> how does it really work behind closed doors there when you think about her ability to drive her own agenda? how do they figure out what they're going to do? >> he is actively sought debate and has not worried about dissent. i think it will be hard for anyone to come in and try to rock the boat. over time i think her influence will grow but i think lit be a consensus building exercise and because of that, perhaps misty allen will have to move more to
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the center to get those on the committee who are becoming -- some of which are very vocal and much more uncomfortable with qe. >> so what does this do to your forecast for tapering? >> it's probably marginal just because the data has not looked great and the shut down is going to plur things. conceivably that is happening. you have the budget congress probably still worried about what happens in january. there is a lot of politics so i think all of those factors are going to push the fed later. >> does the velocity of the taper change? >> no. >> the fed made a monumental
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mistake by not tapering. it's never a good time to give up a bad habit. so you had twists -- they debated and agonized over that. they killed us with the taper debate for a while and now we have to relive this again. there is always going to be an excuse not to live something. my guess is they will do an incremental taper and then they will gradually phase it out. i think it's a mistake but that's what i think will happen. >> quick question. there is no velocity of money. it's just -- it's lost its oomph. if the fed is getting to be more hawkish, does it mean they fold? >> the incremental bang for your buck is non-exist tent. banks have had to raise capital. there is still regulatory reform
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working through. the mechanism has not been working. there has been massive inflow. emerging markets, for example. i think what happens is the monetary transmission necknimec is still impaired. i do think the risk is that it is a little less dovish than people think. the fed does taper in march and maybe even sooner and some of the higher yielding markets suffer. >> we're going to leave it there. let's switch gears here. material stocks taking a hit today. companies reporting earnings this week, some traders are betting that the space could be hazardous for your portfolio. brian, what did you see? >> as we have seen commodity prices sell off, oil, corn prices whacked here. some materials having a tough time. the xlb which is the basic materials etf puts trading at
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seven times daily average p volumes. dou dow chemical coming up tomorrow. you can still do something about the earnings on friday morning. >> what trade really stood out to you today? >> it is something that you have got to watch. if it breaks 30 it can head significantly lower. i think xlb, huge bet. a $2 million put buyer. but the january 2015 puts of the $32 strike level. this guy believes that xlb goes significantly lower because the puts don't pay off or they basically have a 50 to $100 million exposure and they want to expose that. >> stephanie you like it?
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>> we do. we sold it around here. i would welcome a sell off because i think what the company is doing is quite interesting. you have got a new ceo. it sounds like they are very close to getting $2.7 billion for. this ceo has a very good track record of shareholder values. if it does pull back it is one that i would buy. >> more options actions every friday. coming up next, don't miss our trade of the day. a stock up more than 90% this year alone. that and much more fast straight ahead. [ male announcer ] once, there was a man who found a magic seashell.
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bny mellon combines investment management & investment servicing,
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giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon. >> time for the big trade of the day. beaker, what is it? >> one of the best performing emps out there. they have an awful lot of oil.
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great company. but here's the deal. they are 85% -- >> short. >> this is to short pxd. yes. they're 85% hedged into 2014, which means they will continue to produce just like the natural gas producers did '09. total production in the u.s. pioneer still expecting to produce more. they don't care. they can keep drilling. oil prices go lower. you will have to start looking at 2015 earnings. to me this story looks broken. >> that's aggressive. that would be a pricey takeover. so, i'm digging beaks right there. ahead of earnings with paulson? go get em. >> lots of action coming up. if you blink for a second, then stay tuned, we have got all the
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>> welcome back. in case you missed some of
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today's top moments, here is is a rapid fire recount in tonight's executive edge. >> my bet is it's going to be sooner than later. 14, 15 is where we start to see that. >> but if you're looking at the distribution of outcomes, fear is hugely more important than euphoria or green. they go up very slowly. then they go bang. >> we need a new fiscal policy. people in washington have got to understand that the constant bickering and constant disrespect is not serving the american people. we need citizenship over partisanship. >> from being here all of these years, there is no place on
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earth that i have been. not just saying this because i have a love affair. there is no city with more style than detroit city. it's gradually progrezing. it is weak, uneven and fragile. >> markets need to be fixed. there needs to be more investor confidence so we can eget people back in. >> all right. we heard from kid rock, interestingly, about detroit having style and making a come back. part of that is the recovery in the auto sector. >> we have been hearing it from across the board. a lot of companies are talking about auto results. that should be pretty good. i still think the cycle is in early innings and it makes sense. ford and johnson control.
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>> first move tomorrow when we come back. stay tuned. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts.
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amazon? guy did. wow. all right. let's move on here. we have got a special final trade here. tim seymour stopped by with exciting news about a very special event tonight called rocktober fest. >> this is the tenth year doing it. this is wall street getting out there. this is is a charity that provides prosthetic limbs and procedures to kids primarily in developing countries. of the youth in the world, 90% of them have some type of issue that has not been dealt with. this is a charity that we can through tonight's performance, 2014, we can provide 2,000 kids with some type of procedure that will make their life a lot better. it's a great time for amateur musicians. we have a play, a great cause. steve leisman is going to be playing tonight, too.
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>> so a double header. >> look at that. >> tickets at the door today. >> $130. you can still get there. it's nice to give something back. please support this charity. >> that does it for us. thanks for watching. head down to rocktoberfest. >> "fast money" starts right now. >> my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. kwat mad mo "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. my job is not just to entertain you, but to educate you. call me at 800-743-cnbc. everything we hated we now like! and

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