tv Fast Money CNBC January 28, 2015 5:00pm-6:01pm EST
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>> all right. >> politically correct answer. back to you. >> dave, thank you so much. peter as well. really appreciate to both of you. super bowl xlix is coming up right here on nbc. coverage begins at noon eastern. that does it for us here on "closing bell." "fast money"begins right now. live from the nasdaq markets overlooking new york city's times square. a late day selloff in stocks. apple's blowout earnings giving strength to the market but the fed decision sparked a turn of events. olbermann accelerated its rally. i guess the fed chief has more of an impact on stocks than apple ceo, tim cook. we start off with facebook earnings. shares moving to the down side after the company reported
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operating expenses more expensive. >> we just hit 3 billion video views per day on facebook. that means consumer use of video is exploding. from the advertising side that gives us an opportunity to do more because our ad products always follow our consumer products. >> in the interview with julia, i don't know how many times sheryl sandberg said excited and excitement. but a concern about rising expenses. >> rising expenses. we will hear more of that on the call. we want to hear more trends on the ad revenue and video. she wouldn't get into the segment breakdown. there was a number out thereof 3.85. the consensus was 3.72. a lot of people expected a blowout number. stock up 40% in the last year has a very high bar and the
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comps got very difficult going forward. do you think anything went wrong? i do not. last quarter we were concerned about expenses. i think people are concerned how they will grow. >> this is not that type of market where you want to spend a lot of money. >> facebook had an unbelievable performance track record. it is going right at twitter right now with this live video feeds for super bowl. twitter was down. facebook up. i own them both. more twitter than i do facebook. but it has been my hedge. facebook, a more mature company. people put the bar way too high on this earnings report. >> i agree on both of them. last quarter that was a surprise. the magnitude of the spend. they didn't lay it out as a one quarter event it. was a significant spend that would take place over a year. they are go to spend a lot of money. really nothing new here. just a bad day to announce anything that does not have
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clarity. >> with the success comes the spend. you laid it out right. when you look at the success they are getting from that spend, look at the monthly active users, the mobile particularly. when you look at the mobile segment, 69% of the revenue. you can see the growth they are getting there says a lot about this company. the way zuck has been able to perform. zuck. he said look, this is all about mobile. we have to go to mobile. they have executed it to perfection. some of that spend, we should expect. that i wouldn't be surprised to see the stock elevate higher. >> in the after hours snegz. >> by tomorrow. >> all of the metrics, they delivered well. but the point i was making is that you guys all think it is okay to spend it. say growth company and et cetera. but are we in the market environment where somebody that is afraid of what is going on around the world, you want to be
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facebook that is going to spend a lot of money? >> based on these numbers, stocks traded around 28 or 29 times 2016 estimates. i think that is one of the things you can look for. you want to be defensive. you want to be the company. they have to spend to grow. they are all outspending each other. i want to hear what is going on with whatsapp. it is the global platform that gives them scale and size, but i don't know how they are making money there. >> joining us is neil doshi. >> you know, it is a pretty good quarter, i think the operating costs were a little higher than expected. the eps came in mainly due to a lower tax rate than people were expecting. overall mobile ad revenue continues to outperform up to
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69% of their total ad revenue. you know, video views are now 3 billion views per day it. was at 1 billion last quarter. monthly active users is impressive. 14% growth. coming off of a base of 1.3 or 1.4 billion. that is impressive. i think they need to spend to keep up with the growth opportunities out there. google, amazon and apple are all spending lots of money to create deep moets around their business and i think facebook needs to do the same. >> is there a level where the spending becomes too much. they are putting too much capital in front of themselves. people have been critical of companies like amazon. how about you? how do you feel about this with facebook? >> you know they are up 58% operating margins this quarter. it is a little bit down from the
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highs of 60 plus percent. but i think growing a company and maintaining 58% margins is ridiculous. they need to bring the margins down more if they want to capture this global opportunity. instagram. whatsapp. huge opportunities ahead of them. >> neil, how much goes into your calculation with the phone size increasing. iphone 6 and iphone 6 plus. everybody is putting a massive push on video. whether it is youtube or facebook. how much have you looked into with iphone sales ramping up? >> yeah. that say great question. we have not done that correlation yet. but the bigger screens, more engaging content i think drives better usage. i think facebook will be a big
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beneficiary of that. we have seen 3 x improvement on video views per day. some of that is bigger iphones and people watching videos on facebook. and that automatic roll is a great way to get people to click on that video and watch that entire video. i think they have done some really smart things. taking advantage of the bigger phone will definitely drive more usage of video and engaging content. >> let me ask you, how much of that video expansion that we are seeing with facebook is youtube and how do you think about youtube for google versus video for facebook? >> yeah. so far we have not seen a lot of ads on facebook video. but i think that in the past, facebook was a driver of video growth to youtube. usually people would put their youtube videos on facebook and other people would click through
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and it would take them to a youtube video view. i think this could be a tipping point. we could see slowdown in growth on youtube video. facebook could really take advantage of that. they are tapping into 1.4 billion users. youtube has about 1 billion users. i wouldn't be surprised if facebook can really start to take some share away from youtube. >> all right. go to leave it there. thanks for phoning in. facebook shares off of session lows. conference call is going on now. quick straw poll here on the desk, who is a buyer in the after hours session? tim. >> forced to choose, i am a buyer. one of the few companies that hit on operations and growth. i like that. >> i own facebook already. i am staying along with facebook. >> karen. >> forced to choose. >> i didn't short it. does that mean i would go long? >> i bought some options into
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this. i get a little time with those. not a lot. but i do expect to see the stock go higher. are are bond prices are surging on the back of the fed decision. this was a tremendous move in the span of maybe half an hour. >> we thought treasure bond yields were around 178 to 180 and trending highers. if you look at the tlt that essentially measures the long end of the curve, you saw the impact. what did she is a or what did the fed say? the economy was listed as moderate. they told us the economy was solid and job growth was strong. but what they said that was confusing is that deflationary pressures are out there and that they are comfortable with that. they talked more about the inflation side. they said really they think things can go lower. what is the long end of the bond curve measure.
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it measures the long end. that measures inflation. the fed was saying they don't see any signs of that, and that we come in underneath. >> i was surprised at the market's reaction to this. i thought if they kept their plan in place with a july or later raise we would have more of the issue of the dollar strength and we have seen that as a headwind. i was surprised the market did not see this as a relief and that -- i thought it was more bullish. >> what was your interpretation? >> for about two minutes i did see it as a relief. it is always the reverse of the first emotion. you saw the market selloff. they are focusing in on more of the same. ultimately that the dollar strength will be seen as a headwind. out of the likes of proctor and gamble and pfizer and the whole list. >> a lot of people think the fed will bail people out one more time.
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if the fed is stepping back. we could have deflationary forces. there is no fed push. >> there certainly is a raised nervousness in the market when you look at the volatility trading towards 17 and moved up to 18 or 19. closed under 20 1/2. it wasn't just the s&p going down. >> we have a news alert here. >> melissa, the private equity firm tpg filing suit against a former spokesman for leaking confidential information and threatening to take the firm down with an embarrassing information. tpg lawsuit accused lavine of leaking sensitive information to the "new york times," describing himself as a weapon of mass destruction that could bring tpg
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down in ten days and refusing to return company property like a laptop and blackberry that contains sensitive files and e-mail. the suit claims levine, a former george bush press officer took credit for sending scooter libbey to jail over the leaks of the identity of cia agent valerie plame. he said only that he would tell the expletive truth about tpg just as he did the plame situation. a so many said -- mr. levine was dismissed because he alerted senior tpg management to serious issues of noncompliance and fees and expenses. this is a blatant and shameful teammate discredit a whistleblower. that is his statement. a tpg representative responding
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to that says mr. levine was terminated for his egregious and illegal behavior that included stealing tpg internal information, data and equipment. his statement with respect to any other reason being fired is totally false. clearly an ugly tiff developing. we will bring you details as we get them in the coming days. >> apple had a great day but qualcomm sinking in the after hour session. apple seeing record iphone growth in china and emerging markets. but can it sustain the momentum.
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let's get an earnings alert watching qualcomm shares following the after hours session. >> that call is still going on. they beat on q4. their guidance beat as well but they lowered guidance for the second half of the year on a double whammy of not getting built into samsung. samsung's flagship phone, we expect to be the galaxy s6. and when apple gains share they are displacing somebody that
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used to pay qualcomm more money. apple makes their own. qualcomm arguing on the call that volume in the u.s., because the upgrade cycle sell increasing, will help them. and lower priced devices in emerging markets is causing elasticity of demand effect and think those customers will trade up. they told me apple's gains hurt a bit more than the loss of the one samsung design. their relationship overall with samsung continues to be good. they think the low price phone will bottom out eventually and don't see an overall shift in the marketplace where they are losing share. they think they continue to have a good position. in the second half they will introduce a new high end chip, the follow up to the snapdragon 810. they expect that to be a game-changer. that is the story they are telling us today.
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>> what do you mean by apple's gains were more than samsung's loss? >> they don't expect to be in a one phone from samsung. that hurts because it is a high-end phone. when apple gains share overall they are not just displacing samsung, other android players and windows phone players, or at least one, that samsung would get a bigger share of the revenue from. they get a base share from apple but not much. that actually hurts qualcomm's growth more than losing that one design in the samsung phone. >> john, thanks for that. keep us pd on development. this stock has been dead money over the past year. there is also the overhang of china. is this a no-touch at this point? >> i thought it was a touch at 71. totally wrong on this. you are back to 2013 resistance.
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what i thought was the bad news, it was out there they told us. they guided on this point. 2015 was in the prices. we got lowered from there. and the samsung share loss, this was in the price a week ago. this is not new news. that was something we were talking about last week. >> we knew about china. it never recover from the last earnings cycle. you see the stock trying to fight back to that level. but asp is a major canary in the coal mine. it is a no-touch. >> how but, pete? >> at these levels, i am with tim. around 70 i thought it was a touch. we are wrong as the stock tumbles down today. i think the double up to catch up in this case, i think i would add it at 65. >> why wouldn't it test the six-week low. >> it is getting close to those
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levels. >> don't you want to see it hold above? >> i would like to see that. but i think at these levels, this stock is getting absolutely punished and maybe oversold based upon the news they are getting. >> we will keep you posted on qualcomm. meanwhile, apple's bigger screens could be a key to growth in china. they grew 70% over a year and will open five new retail stores in china in the coming weeks. ramon, great to have you with us. in terms of that land grab in china, is it just that all of the people in china that can afford the phone are finally buying it or reach a saturation point at which all of those income level people will have them and have full saturation? >> i think the penetration and the saturation question for china remains to be a land grab at this point.
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we are talking about billions of users over here and many which are still using feature phones. the opportunity for smartphone vendors and manufacturers is still very high. even when you get the smartphones into the user's hands, there will be an incredible replacement game going forward. as the numbers go higher, i think you will see even higher than expected in the years to come still. >> that billion potential user though, ramon, that is a false number. there are a billion people in china but not a billion and a quarter people can afford an apple phone. we are talking about a small fraction of that billion number. >> even with that billion number, we are talking about a lot smaller. one-on-one thing that goes on in china and other emerging markets, there are a terrific number of users that will save
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up to a year's worth of paychecks to be among the first or among the only to own the latest and greatest. so, you know would i say it is a couple hundred million? at the very least, sure. but we can easily go upwards from there. >> the other problem with emerging markets is frain structure and network. china is falling into place with 4g. how about india where they have less internet penetration? indonesia and other parts of asia which should be a home run for apple. >> i think it should be a home run. but at the same time, waiting for the infrastructure to come along and for the prices to come down. when we go outside of china, you will see a lot of user dynamics. when you get to the smartphone plan, are those going to be affordable for a lot of folks?
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probably not. it will be rather cost prohibitive. when you look at that dynamic on top of where some of the networks are now and where they aim to be. apple will be trailing. even though they say we dealt with our numbers from a year ago. a year ago the numbers were quite small. >> ramon, thanks for phoning in. let's trade apple here. it was still a great day. it still held on to gains. >> i thought i was in no man's land. i didn't add here. but it was a great quarter. >> do you agree with carl talking about adding in the multiples of the dollar and their earnings potentiality this , is far too cheap. he is a proponent of using that cash and buy back. >> right. that is where everybody came in today. everyone started to talk about $130 billion of cash.
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guys really missed the boat. they were coming in today talking about china and almost the capital market side of the business. you don't get that until april. that is what the company told us. i think it keeps you in the stock until then. fiscal second quarter will be another strong one. >> it had a great technical rally yesterday. karen and i talked about this last week. if you overlay the s&p it is acting in lock step with it. you would think the macro markets going lower, apple will be below 110 in the next few days. it is a long-term investment. >> you still think it will be tied to it? >> definitely. guys will be selling one of their winners to lock in a >> still ahead, facebook is falling after its earnings report. we will get the latest from mark zuckerberg.
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. we have an earnings alert on las vegas sands. >> shares up after hours. saying did somebody say things had slowed down. sands missed on the top line but there was a beat on earnings coming in at $1.35 billion. a nice bump in the dividend the last quarter going up. yay dividends. revenues fell over 20%.
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traffic from mainland china is accelerating up 20% in october and november. 80% of revenue comes from mass gaming or non-gaming. their non-gaming revenues are more than the other five players combined. >> we made all of these investments when others didn't. everything we have invested in macau today. the sleepy moons, retail shopping malls, myspace, entertainment offerings and everything we will invest in the future is predicated on delivering on our practice to help macau in its economic diversification and its evolution as the world's leading business and tourism destination r. he said the o bit wary on singapore is overdone.
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before a company named las vegas sands. not much about las vegas. they didn't want to talk about it. casino revenues down 14%. they said hey, hats off to the competitors. no change in strategy in las vegas right now. >> thank you very much, jane. a lot of the other gaming stocks in the after hour sessions with exposure to macau are trading higher. >> i think all of these guys have said this. they look cheap. they are not cheap. you talk about competition, all of these new openings. they will be under significant margin pressure. i think it is too early. >> if you look at the charts, they all look identical. singapore is a revenue stream that none of the other names have. if you go under revenue you don't see it with any other company. if you are go to take a bet i would go with las vegas sands. >> just because of singapore?
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>> 3 billion. >> 9 billion in macau. 3 billion in singapore. united states, 2 billion. >> just so you are not tied to one or the other. >> does that tell you that the pie is growing? they all move up together? >> i think they can all move up together. but you have to wait until macau stops bleeding. they just have to stop bleeding as they have in the past. >> we are monitoring facebook's earnings call. we will bring you the latest headlines from mark zuckerberg after the break. and facebook and apple are among the big names reporting this week.
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say karen fireman was wrong about texas. we start off with the latest from facebook's earnings report. julia. >> that is right. with those concerns about expenses weighing on the stock after hours, the ceo tightened the company's forecast range for expense this is year saying noncap expenses will grow 50 to 65% down from the previous range of 50 to 70%. facebook ceo, mark zuckerberg, called it a good quarter and a great year. >> one side of our continued growth and engagement is our progress on visual and public content. more than 2 billion photos are shared daily across facebook, instagram, messager and whatsapp. >> facebook does not break up revenue from the individual apps
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but sheryl sandberg said instagram's early ads are scaling and promising and zuckerberg pointed to the potential with whatsapp and messager. >> we expect them to connect hundreds of millions of more people as well as important contributors to our business. >> zuckerberg pointed to the value in search. an area facebook expects to create value in the flx few years. now it is focussed on connecting the world and building new and better products to help people connect and share all sorts of different content. melissa. >> julia, a quick question, zuckerberg on the last call said they would invest aggressively. any details on what they could now they narrowed the range on spending? >> well, they are talking about all sorts of areas where they will be investing. investing in video, an area
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sheryl sandberg they have been making a lot of progress on with 3 billion video views per day in. hiring and all of those apps which zuckerberg pointed to. and also it sounds like they want to invest in new apps and products. we have to remember he has made a big push for connecting the world. they said they made progress connecting people in emerging markets and clearly they want to do a lot more. >> what was the activity on facebook. >> that was partially why i was so bullish. i see it down on the after hours. the options were telling us they expected something very positive. the interpretation because of the spend is why the initial reaction is to push the stock down a couple of dollars. i think in the end game because of all of those upside buyers, both very bullish. i do think the stock's trajectory is moving higher.
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>> i was just above the market. 82 strike calls. >> a number of other big companies reporting tomorrow and friday. time take our position ahead of the reports. chevron is reporting before the opening. a lot of people will be listening to oil forecast. >> guys have been moving money into here as a pseudosafety bet. but you go to the refiners. wti brent spread is coming back online. we saw the oversupply of oil and we have seen gasoline demand pick up. that is a recipe for the stocks to really increase in value. we have seen the move already in the refiners. >> next up, altria reporting earnings friday before the bell, tim. >> this is a company that i own. through its spin outs is now effectively -- e-cigs, smokeless
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tobacco and the cigarette business. the pricing power continues to grow. what concerns me is the stock had a huge run. 48% year over year on the sector bet on these guys showing fantastic cash flow. it is expense testify itself. you have to keep that in mind. fantastic company. very diversified. very consistent. i would stay long. worry with this floor or ceiling on 10-year yields, do you think there is a push on this stock yielding 4%? >> there should be. unless you see a very serious revenue decline. >> especially one that generates free cash flow this. behaves like a bond. >> all right. and google, out with earnings after the bell tomorrow. >> yes. this is one i had for a while. very disappointed 2014. not starting off as a stellar 2015. you know, this reminds me of
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microsoft a year or so ago. an old name in the industry. but still an incredible product and very, very formidable marketshare and fantastic balance sheet they don't do anything with that they really need to. so many drivers. and they have an expense issue like a facebook where they could get that down. i think the valuation here is very attractive if they were to come public today as a new company. >> it is like microsoft a year ago. a year ago we were looking at what they would do with emphasis on cloud and some of the growth cares. what is the catalyst here? >> i don't know. >> we talk about search. 65% of search. that number came down from 70% when i first started to do the search. they are 90% of mobile. if search moving to mobile, they
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own mobile right now. that is where they are. >> that is where they are. >> yeah. but where they grew revenues by 20%. how many other companies as mature as this? >> i am okay owning what is considered dead money for a while. if it continues to build a ridiculous amount of cash. i wish they would spend that cash. >> tell me what the catalyst will be for google. >> i really don't know. i don't think it is dead money necessarily. i need growth. i am not seeing growth. >> they are at 90% now. why are we not selling apple? should we sell everything? >> they do have growth. >> the catalyst of the iphone 6. >> this is what i will say. we said the stock near 550. going into the numbers, i think have you a chance to buy the
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stock back a little lower. i don't think they will deliver anything earth shattering. but i think it does lack the catalyst. the bar is very low. good setups to own a great company. >> and you are watching visa. >> visa has made an incredible run since last fall to the level that it is. kind of pulling back now. it has growth in revenues and earnings per share and volume growth. for those reasons, you can hold visa. >> we have breaking news on mcdonalds. >> mcdonalds ceo is out effective march 1. the board elected steve easterbrook. former chief brand officer. >> don thompson is out. he has been under tremendous pressure. same source sales figures decline and some of the worst in months and months and months. they just brought in a new chief
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operating officer. so now what? look at that. >> this is great news for a company that needs to shake it up. this is at least a catalyst for a company that i don't think is broken. i think they need product innovation and need to do a lot on the marketing side. it is very interesting. a change at the top will bring at least new momentum. look what it did to other big companies. i am long on it. i would take another look. >> i guess. does it tell you the problems are more severe? >> i was happy yesterday. >> okay. >> with the potential. >> right. >> was a new ceo part of the catalyst for the stock? >> no. i think these are all things that will help. >> pete, what do you think? >> i think we talk about who is on the hot seat. i think mr. thompson was one of those. >> he was. for a long time. >> the hottest of the seats. i would point towards ibm as
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another one that is extremely hot. they are not producing. mcdonalds is one of those. i don't know what the fix is. but as the top changes, maybe we start to see the bottom change. maybe the menu changes. some of the things everybody is talking about. >> at least there is a recognition that there is a problem that needs to be addressed. as a long time mcdonalds had falling gas prices, same store sales continue to be dismal while the others were doing okay. you take mcdonalds and overlay a wen wendys, mcdonalds is a lagger. >> we have talked about some of the companies trading at multiples that are scare nefast food. casual dining maybe deserves a little better. one of the things that is wrong with mcdonalds, they have gone from big mac, to who are they. i don't think there is a defining product. >> you go there to buy the value
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meal and unfortunately for them they are not getting the numbers out of that. >> you know the name i always go to that performed well and the chart is sexy. dominos is in the same type of marketplace. for whatever reason, mcdonalds, the menu stinks. it is really a definite change in peoples' taste. they want a healthier menu. domino, mobile, international, stock on fire. >> we will continue to follow this mcdonalds story. ceo, don thompson, out at mcdonalds. steve easterbrook is in as the new ceo. stock is popping up about 2%. one texas bank says low oil prices are not a problem but the stock is down 20% over the past three months. we will hear from the ceo after this break.
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mcdonald's for a while and then returned to mcdonald's in 2013. he is the new ceo. the stock likes it. it is up 3%. an after hour session high. this is a story we will continue to follow. crude oil hitting a six-year low. back in december karen told us a short play involving a regional bank. shares down after reporting earnings in line with investors expectations. joining us is dick evans, good to have you with us. >> thank you, my pleasure. >> you went through all of the stress testing you are doing. a lot of analysts are not concern with the direct exposure to energy but the knock on effect, the fact that demand may be down in the state of texas. what are you seeing in texas in
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terms of the economy? the data points in terms of business outlook, future, business activity, they are not good. >> well, let's look at them. we are coming off of a great year. double digit increases in earnings, loans, deposits, we are continuing to grow this company. we are coming in with a strong capital base. we have plenty of money to loan. we are in business. think about those data points. i hear what you are saying about oil prices. one of the things that we did in the call is to make sure people understood numbers. we did a stress test. when you do the stress test at $37 for 15 and below that going forward for four years, for our company it is very manageable. and also looking at the service companies. there is no question things are
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go to slow in texas. if you look at the dallas fed numbers, they are saying we will grow between 2 to 2.5% jobs in 2015 in line with the united states. it is below 3.5% that we grew last year. but there is still good growth. you talk about our 16% in energy loans. no question, that is the right number. there is 84% in loans that are very diversified and it speaks to what the economy is. >> right. >> this economy in texas is strong. >> it is strong. when the dallas fed comes out with their january survey, dick, and says perceptions of the broader economic conditions have worsened in january and that the index of future business activity dropped from 13 to minus 6.4. 84% is not tied to energy this.
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is overall business sentiment in the state of texas and it is worsening. are you concerned that even though they are not directly impacted by the price of oil and decline of oil, that there is a sentiment change that might curtail demand for loans? >> there is no question that there is a lot of talk. but i don't agree with it if you look at the facts. this is speculation that has been going on for a couple of months. oil is down. we know that. but when you look at the facts going forward, there are plenty of opportunities. this, for example one of our largest segments is medical. i don't think medical will end tomorrow. tell continue to grow. leesure and pleasure. there are a lot of facts. the ports. they all have big projects going on. while the energy -- the others will continue to grow. >> unfortunately we have breaking news and need to let you go. we hope you will come on again.
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change in the guard at mcdonald's. ceo don thompson is out being replaced by steve easterbrook. it is popping. after don thompson's tenure the stock was essentially flat while the s&p enjoyed a 47% gain. so this is a ceo investors have stuck with and not seen any sort of return. >> he took over from a fantastic ceo, mr. skinner. and a company that needs direction. 3.8% dividend yield. i think it will hit them hard. russia hit them hard. there are things in the price that give you reason to be confident. >> we need to hear what steve wants to do, right? >> what is the new direction? what will be the shake up to get this company to start getting
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attracting the companies. >> you stick with a name like dpz, a much higher multiple. here is a catalyst on a silver platter. >> seems like the stock price is the leading indicator. we saw that. when it was good to be domestic, they were domestic. now they are just crushing it on mobile right now. >> thanks for watching. see you back here for "fast money." the tech leader crushed the quarter but did it raise the bar too high? and i am tearing open an iphone 6 to show you how you can invest on what is inside. "mad money" is next. tdd# 1-800-345-2550 [ male announcer ] your love for trading never stops,
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