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tv   Mad Money  CNBC  May 25, 2016 6:00pm-7:01pm EDT

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this name. >> gdx. >> silver. sld. >> starbucks, sister. >> i'm melissa lee. thank you for watching. see you tomorrow at 5:00. "mad money" starts right now. my mission is sim mr. 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. "mad money" starts now. >> hey, i'm cramer. my job is not just to entertain but to teach you and educate you. so call me. or tweet me @jim cramer. what do you do with a rally by tech, oil and the finances like the one we had today?
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s&p 500 and the nasdaq climbed. what do you do? i'll tell you what you do. you own it! buy buy buy! before i get started explaining why i like this market, let me say that i pay very close attention. we got some real eye popping numbers from the investors intelligence poll. it turned out that only 35% of the wires are bullish. lowest level since february. 24% are bearish. a six-week high and the rest are calling for a correction. more than any time in the last eight months. these numbers should make you stop think and. wow! are things really that bad? i mean, is the situation really as frightening as february when the global economy took a nasty spill with many companies on the
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verge of bankruptcy that had nothing to do with oil and gas? the oil and gas patch just ravaged? are things truly as terrible as eight months ago when china was on death's door, looking like it would collapse? we've seen the worldwide financial catastrophe? obviously not. the very idea is ridiculous. there's no way things are that bad. even though there are some soft patches in the economy, we have at love good things going too. i always tell you is well above its weight. plus we know there is been paik-up in nonresidential construction. even retail isn't that bad provided you factor in amazon. the idea that there could be this many bears right now at this very moment is just wrong. i think many people have been caught on the wrong end of the see-saw here and they're about to be sent flying by the bull who jumped on the top. he will slam his side into the ground. watching the bear into someplace he did not expect. the stratosphere.
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when you have so many people who hate, hate, hate this market, what should you reach for? you reach for the hate, hate, hate sectors. tech, energy, and the one, banks! oil and water may not mix but oil, banks and tech, nothing but oklahoma thunder net. why the banks? let's get started. first, the chief reason everyone is so bearish. and i'm talking about the sudden drop-off. over the last funeral years we learned the fed is now off to the races with the rate hike stuff. they'll be able to make more money off it. for banks to generate enormous returns. major banks in this country with gigantic amounts of money. they pay you next on nothing. you know that. have you seen it? you will still likely get next to nothing after the rate hikes. banks take forever. but they will be able to deposit
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your deposits. making a fortune on what is known as the net interest margin or nim. the most important thing is to own the biggest ones. jpmorgan, citibank. jpmorgan, wells fargo, with little exposure to the dead lands that are sales, currencies. plus, wells is growing like a weed. sure, it is expensive but incredibly well run. it has always been spegsive. even though company had aed a lot of runs. the price of crude, the highest since october, has taken the pressure off. bank of america has had problems. it has a huge deposit base that would be very hard for them to screw it up. citigroup? this is my new favorite. just settled a big chunk of litigation. and best of all, city trades.
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that would be the cash on hand if you were to shut the door, and liquid ate everything, i think when citigroup gets permission from the government to buy back as much stock as it wants, then this $46 stock will run, it will catapult to $60. that's why. we've been buying it aggressively. you can follow along at action alerts.com. they go out to you before we buy anything. yeah, the banks are unbelievably cheap and hated. that is what you reach for when everyone is so bearish. next. energy. oil is on the verge of my $50 target. however, there are two issues of play in the oil stocks. first is that crude inventories were very low this morning. you might argue that that was caused by the wildfires. i say wait a second. the dip was much deeper than
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that. certain ones that ran today. they all are cheaply or heavily involved in natural gas. it's getting hot out there. huge inventory. 90 degree temperature in the northeast. it makes sedge. an amazing move in stocks of hewlett-packard enterprise. the latter soaring more than 70% in one day. off its i.t. services. the fact that so much wealth can be created with the flick of a pen. it is testament to how cheap some of these tech stocks might be if they were broken up. i love the deal. what i really like is that investors are so turned on by the better earnings.
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that's what matters. this merger makes me think ibm stock may be much too cheap. and then microsoft could be under valued. meanwhile one of the hewlett-packard, it hit a brand new all time high today again. nay sayers. the stock everyone claim to hate. the one backed by the so call poorly run company that lacks innovation with its best days behind it. apple. roared higher again. what's the 1.75 gain among friends? i guess the nay sayers don't mind the 6 points that were picked up after watching tim cook was on the show. when you get this kind of unexpected rally with no real visible or obvious catalysts, when you build on a rally in the huge cohort that is tech. it makes you wonder.
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why is everybody so darn negative? and how high will this market be? when they change their minds. andrew in new york. >> caller: the sox got off 6, 10% the last few days. not so hot. what's driving the stock? i got burned. >> what's driving it? sports authority decided to cease to exist. it was like here today and gone tomorrow. and that's why. barry in florida. barry. >> caller: hey, professor cramerica! can we get a boo-ya? >> boo-ya back at you. >> first congratulations to you and to your daughter anna on her graduation. >> thank you. she looked good. i tweeted her.
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>> caller: i saw it. i'm following you. i watch your video live on facebook. loved it. >> did you see chewbacca? did i a chewbacca one the other day. it was pretty good. >> caller: thank you for everything. what do i do with my toyota motors share? on one hand, they just recalled 1.6 million vehicles. on the other hand, they're going to collaborate with uber. and toyota is taking about, they're talking about the new leasing option and the self-driving cars. so basically, my question is, do i hold or maybe sell half and buy gm? what do you say? >> i'm not a big fan of motor cars. i have to tell you, if that japanese yen continues to go up in price, you won't want to own gm. i'm going to say no. jeff in hawaii. >> caller: aloha! >> mahalo. >> caller: i just inherited
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$500,000 of proctor and gamble stock and have a five-year time line to retirement. should i keep it, sell or diversify? >> first of all, congratulations. sadly, you inherited but we have to diversify. on a cost basis, it is much too low. i don't want to have the tax burden. and by the way, proctor and gamble, slowly reduce it so you're slowly diversified. and then i think you'll be absolutely fine. i want to you cut back because you have way too much proctor and gamble. this market is a see-saw and the bears are sit go squarely on the wrong side. as they continue on pass into this stratosphere, i think you reach for the banks and the teches to participate. tonight, macy's, nordstrom, there is one more. can you still buy this friend of the farmer? then, netflix just announced
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exclusive streaming rights. and bambi's mom. you know what i mean. i'm investigating. it is and one of the best bear stocks on the street. i'm checking the bulls in retail. my exclusive. so i say, let's forget the cookies but stick with cramer! thanks man.
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it has been able to defy the gravitational pull of the industry. i'm talking about tractor supply. tsco. the farmer garden chain that is like lows and home depot. if you're looking for outdoor clothing or tools to repair farm equipment or like birds eggs and stuff, then tracker supply is the place to go. what makes this one stand out? at a time when the vast bulk of retailers are being shredded from amazon, it started to get some real lift. in fact tractor supply is a couple points away from its all time high. i think a major part, this company is, occupies a kind of peculiar unique niche in retail.
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one that doesn't have that much competition. they describe themselves as the leader of rural lifestyle stores in the country. 59 locations. 49 states. that means if you're a farmer, own a ranch, you want to renovate your home and live in a rural area far from big cities, tractor supply is for you. a lot of this stuff can't be found on amazon or it is the kind of thing you need to buy immediately like food for your livestock or pets. it is why i'm such a good client. it has the best selection of all the stuff i can't get on amazon and it is wiping out a lot of the mom and pop places i used to get my feed. at the same time it avoids competition by deliberately tracking in the rural market which means they build stores in less densely populated parts of the country. after all when your key demographic tends to own livestock, it doesn't make sense to put up stores in a major metropolitan area or densely
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packed suburbs. you don't want to put night place where people have never seen a cow or have never smelled one. and believe me, as a farm he, you do not ever get used to that smell. meanwhile, the rest of retail is suffering from different ailments. avoid these negatives. one thing, simply too heavy to ship. via fedex or ups. the ant-mall retailer, they're out in the middle of nowhere. it is a social event. the people running tractor supply understand something that we have told you about on last week's off the charts. these days, people treat their pets like family. maybe better than family in some
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people's cases. and they buy just about anything to keep their cats and dogs healthy. the company even started setting up pet clinics. what else? it benefits from the new sustainability vibe where people who really care about health and wellness have started to grow their own food. like me. which is the logical course of action. if you're one of the many young people or older people who don't trust the industrial agricultural complex. this gives them whatever they need to raise their own chickens. birds will have chicks. lots of them. a bee keeping product line in hundreds of the stores. when you consider that even steph curry's family is getting involved in bee keeping to harvest their own money, you'd better believe it could be popular. maybe curry should focus los bee keeping is that more on bee ball. i'm going to try my hand on bee keeping.
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we're not getting enough bees to pollinate my garden. bees can't find my place. i'm trying lavender this place. back to the fundamentals. they carry higher margin instead of selling someone else's merchandise. on top of that sometime in the next month, they are expected to set up new inventory mattresses. meanwhile they never stop trying on connection with customers. that's why it is in the loyalty program. neighbors club. results have been very positive. tractor supply has one thing that makes money managers sell retail. the ability scale to grow. they're not putting up any home
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depots. they're in 1,500 locations. but long term they think they can have 2,500. the runway is expansive. it is enormous. and they know how to execute. the company delivered a bottom line beat. robust guidance for the year and they reported these numbers when the vast majority of retailers are being hammered. even compared to the others. lows and home depot. a 10.2 revenue growth versus less than 8% at lows. 9% at home depot. gains coming from higher traffic. it is the exact opposite what happens a most retail here's can't steam get customers in the doors. where do we go from here? right now they are selling for 23 times. and makes it more expensive than lowe's or home deep over. lowe's is at 17. home depot at 17. still, i think they deserve that premium stock.
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at a time when most retailers are getting trounced, you want something that's ill 90sed against the likes of amazon which means you want to own tractor supply. ideally i would suggest waiting for the next market wide sell-off and then buy this one into the pull back. the way it is trading, i don't know when you'll get a chance. where are they when you really need them to buy the stock of tractor supply. much more ahead. >> online netflix to see if the recent move is for real. plus, from calvin to tommy, this supplies to major suppliers around the globe.
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last year, you could buy these. within fang, it was up 134%. but that's all changed in 2016. netflix is underperforming. in the last week it seems to have caught fire. what the heck do we do with netflix? the stock is down 30 points from
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its highs last december. i think it is worth remembering that we've seen this story before. we saw it on netflix. netflix pulls back hard after a pro longed run. we've seen it twice before from 2011 and again if 2014. net nix stumbled in july 2011. the stock went into free fall. then trading for the better part of the year. then it got its mojo back. as the overseas expansion took off. orange is the new black. became one of the most popular water cooler shows around. the stock rallied an astounding 745%. once again though, when it got
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overheated, the stock fell off a cliff. as people worried about new found streaming competition. and then the company hit a real speed bump. disappointing subscriber growth. coupled with higher content costs. it peaked about six months ago. is this what we've seen before? it finds its footing and powers to brand new highs? a process that might have already begun? in order to answer this question we need to understand the source of the recent underperformance. for most of 2016, the pessimism has seemed palpable. what soured wall street on the netflix story? what happened here? you'll hear that it doesn't seem to care much about profitability. it is true. the earnings haven't been too great after generating 62%.
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that declined last year and it is expected to come in at 27% this year. the company has been like a drunken sailor on programming, licensing and content. something that is expected to continue. that will be the way of business. but nobody cared about it last year. nobody cared that it was spending money like crazy. the company was generating phenomenal subscriber groet. and the speed of the growth. those are the key metrics here. when they were adding new users, it was justified. then it was down to 2014. the company generated. that looks terrific. however, things started to break down when netflix reported the fourth quarter results. even though the company generated the subscribers in a fabulous 64% clip. the domestic subscribers came
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in, the first time it had ever been below 15%. then when it reported its most recent quarter, the stock got clubbed. the reason? despite posting strong results with 81.5 million members, well, they gave conservative guidance for the current quarter. forecasting just 500,000 new domestic subs. wall street was looking for 600,000 and 2.9 million. so maybe netflix had hit a wall. and once it slows. all sorts of investors jumped ship. nobody likes the momentum stock without any momentum on. top of that, investors are feeling it. last year we kept carrying about how china could be a monster growth. as the company mentioned some chinese online broadcasting
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companies. however, in a presentation on january. they poured cold water on it saying it might take two years to break through. and pointed out that they had on negotiate for six years before they could sell the iphone in the people's republic. that's not what china wanted to hear. that's why. in the past week it has come roaring back. there is still a potent case here. second now, that netflix has 81 million subscribers, they can make a fortune just by raising prices, even a little. netflix is a necessity in my house and my kids' houses. i think it would be a great value even if they double, double, double the price. but the current subscriber with every $1 price increase, netflix rakes in an additional $1 balance year. third, in 2014 netflix raised
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prices from new users from $7.ninl to $8.99 a month. but they grandfathered existing users like me. i'm not a grandfather. they grandfathered my price. then they raised the price for new members a second time to $9.99. the greatest news for all those who got grandfathered in is about to expire. these are the company's longest standing customers and they're about to gradually get hit with an automatic price hike of $1 or $2 a month. that should translate to an extra $900 million a year. the renewals of existing hit shows. they make a lot of money. look. think about how much easier it is. fifth. and this is probably most important. deciding the exclusive deal with disney. netflix will be the only ones to offer it from marvel, lucas
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film. meaning if you want to stream star wars or captain america, netflix will be the only place tow sight. no hulu. while they will be paying for the rights, i think it will be worth every single penny. so while netflix is selling for $50, i believe the stock is worth buying here. they may seem expensive. it is actually the cheapest the stock has been according to the metrics i've followed. it has been bouncing back. i think it has a lot more room to run. every time stock has fallen out of favor, it is always immensely found its footing. that seems to be happening right now at this very moment. so i say it is time to -- get on board the netflix train.
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steven in new york. >> caller: thank you for taking my call. >> my pleasure. my question, i've owned and it followed it for 20 years. this past week, red stone removed the current ceo from his trust. that will control the company once he passes. the trust will be controlled by his daughter. viacom has comedy central, nickelodeon. it seems the streak doesn't seem to be valuing it correctly. >> that i think the changes would all be positive. i think the stock is too low. i would be a buyer of viacom. that's right. i would be a buyer, not a seller. marcus in oregon. >> caller: it's an honor to speak with you. disney. this thing went down 8.5% and this change. it looks okay to me.
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>> let's not be captured by the espn short term numbers. let's think about all the unbelievable movies in the pipeline the next five years. disney is an annuity stream. with shanghai disney coming up. i like the situation. someone tells but the hard netflix sell-off, you can say seen it and move on. the story is packed with action and adventure. i think it is worth owning. every time it has gone down, it has come back. much more "mad money" still coming up. time to start shopping for a better deal. can the movie sustain a shaky foundation? and a hump day edition of lightning round. the heirloom tomato.
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what should we do with a power company? this stock has been a real roller coaster. down more than 40%. the company reported a robust quarter. $1.50 per share. higher than expected revenues in china, even better companies. it has gotten much better. how is it that pvh has managed to do so well? let's take a closer look. the chairman of pvh for more on where the company is headed. >> thank you. >> one of the things that we have to do right now after this unbelievably good quarter. this is not a company hostage to a couple mall department stores.
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>> i think on two levels. first of all, our international business represents 50% of our sales. and over 60% of our profits. so clearly we're a global player in the apparel industry. and then we're also a multichannel player. so we're not just a department store channel. we have our own stores throughout the world and the united states. we sell online. to our own sites. that has been a robust business. >> let's use the example that has rallied. tommy. just run by the number so people know how important it is. >> well, look. on the calvin klein business. it was driven by strong performance internationally where we really saw high double digit growth. also, strong growth here in the states. we've got, that brand is really on fire.
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>> i happen to wear the underwear. not that we have to get -- it's very nice underwear. that's been the standout. >> it is better than nice. the number one department store underwear brand in america. and it is the number one designer brand underwear around the world. for men and it also has a very large component on the women's side. growing significantly faster than the men's. >> why is that? >> product innovation that we've had. we've really introduced the cotton product, domestically and internationally. on the men's side, a new program for us. really connecting with consumers from a, both digitally and in print. we're communicating and getting the message across. when you are delivering great product, at good prices. you get that response from the consumers. >> domestically we're dealing
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with some of the issues. the mall and our retailer stores. it is not traveling to the united states. both calvin and tommy, a big part of our u.s. base. take businesses outside, the tommy business is in europe. up 8%. and for fall, 200 bases higher than last time. >> that's incredible. >> what does that mean in terms of, people want to say how is pvh going to be hurt by amazon? what do you say? >> well, amazon is a big customer. >> you're not a loser. 27% retail growth. that's good. >> especially when you talk with core products. amazon really sells well. we have a lot of that on amazon. we have a good balance. some of our fastett growing businesses are the macy's.com business is on fire.
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it is critical, given our brands. we need to be where the consumer shops. >> let's talk about something that is problematic. i usually don't want to dwell on it because it is not as important. but the heritage brands. you have 50%, 70% of women's shirts. the number are just not good. >> i guess, those are basically domestic business. so feeling pressure that's going on here. top line down 12%. bottom line, flat. >> bottom line flat. that's what we need to look at. >> the heritage business is 15% of our profits. we managed that business for cash flow and growth. it gives us huge scale in efficiencies. it is not the story about what will drive this business. >> i'm wearing one of yours, i wear it every other day. your neck wear.
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all of your brands are great. >> i think the challenge is what's going on in the u.s. market. just that. in for, it is as strong or stronger. >> all you have to do is look at, two weeks ago retailers reported. it was a drum beat of bad news. most of those are key accounts. we're feeling some of that pressure. fortunately for us, the category that seems to be doing stronger in department stores is men's. across the board. not just women's. it is accessories. center core. it has been a big driver of the growth the last few years.
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that business is under a lot of pressure. a high margin business for those customers. we don't really play in that category in a big way. we are much more in that clegs. i know business is tough in traffic. but our businesses in those key retailers is not as difficult as the overall. what happens to the penny's, the macy's, the coles. >> i think they go on. they are making the investments. these are smart executives that have been running big multibrand businesses. they're reacting to a market that is moving very quickly. i think they're making the right choices as they look forward. they're looking at the
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portfolio. i think you will see pruning of stores. it is the right thing to do. get the business model back on track. >> all right, good. so you're not someone who says the decline and eventual rigor mortis. >> no. it is changing and you need to react to it. but it is evolutionary. not revolutionary. >> china was called out. i think we're situated as a premium brand. >> it's not tiffany. it is what they want. and i think it is a brand that resonates. we have white space to grow in. with the tommy hilfiger and the calvin klein. we're coughing up high single digits. >> a great international story that we should start thinking about as a domestic power company. it is not adding up. don't miss the upside.
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this one is doing great. manny, always great to see you. >> stay with cramer. what is freedom? yes, it's riding a horse across fields and stuff but it's mostly getting to watch your directv with unlimited data from at&t. we're setting families free. so they can stream away - and not squabble over who's using how much. so go, family. watch. freedom. seize the data! get unlimited data when you have at&t wireless and directv. switch and get up to $650 credits, per line.
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it is time! time for the lightning round! and then the lightning round is over. are you ready, skee-daddy! we'll start with dan in new hampshire. dan. >> caller: good evening. i bought $3,000 worth of pharmaceuticals. >> look. my father has it. i'm hopeful. because of what they have, i'm still saying it is a good speculation. >> caller: hello. >> it's jim. what's up? >> caller: how are you doing? i'm from new jersey. your neighbor. >> good to have you around. >> what's up? >> my question to you is micron.
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>> listen, i'm no longer putting the hate on it. enough is enough. it is okay. john in california. >> it is the best place to live in your car if you're living in your car. for the record. >> i know they did the hepatitis thing with success and now they're working on the zika virus. >> they have to do an acquisition. get some growth away from hepc. otherwise i can't go buy buy buy. >> i want to get your thoughts. >> there's only one company for genomics. the all time high today.
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dan, what's up? i'm in bulldog country. i want to know, wells fargo or sun trust? >> do i prefer wells fargo. the bank of buffett. i think it can go much higher. don in texas. >> caller: thank you for taking my call i want to ask but a stock amd. >> i'm no longer negative on them. it's too low. in a tech rally i even endorse it. wow. okay. let's to go connor in indiana.
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>> caller: i was wondering your thoughts on petroleum. >> it has the assets. my favorite is occidental. my travel trust owns that. one more. nick? >> caller: what if apple doesn't work out? >> you'll never notice the difference. too small to that position. ibm is more important. ibm is going higher. i think it is a bbb. that's the conclusion of the lightning round! >> the lightning round is sponsored by td ameritrade. working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey?
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remember, when you're out of slits, you're out of beer. it is exactly why toll brothers chairman bob toll turned out that old line when he was describing the lack of inventory in the housing business these days in yesterday's conference call. he told a rapt audience on that call, you have 4.7 months of inventory. that's at the current pace. the bullish statement was one of the precipitating factors. he went on to say and i quote again. as you get a little bump up in
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the pace, you're out of slits. you're out of beer. it will be expensive and i'm not picking that is coming on us but it could be a spurt of new housing sales. in other words, people will have to act fast if they want a new home. not only that, he thinks higher mortgage rates could make a positive, not a negative difference. if the feds go up an eighth or a quarter, it doesn't mean we shut down. it probably means price increases which spurs action. the thing everyone is dreading may be what drives housing out of the doldrums. i'm been listening to his calls. we gave you a great summary at the top of the comments. we continue on believe the
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drivers are in place for the slow but steady growth. home equity values are rising. the industry is still not building enough homes. that's a deal. this truly was the breakout that many of were waiting for. from 713, 855 members. labor costs were deemed under control. gross margins were terrific. the demand was widespread throughout the country. all positive. given how much texas relies on the business, it was the hard toast keep one. california was conservative only because there were not enough rooms. in fact, the only part of the country where there is an actual bid spread in negotiation is at the highest nenld manhattan. it seems the plus $3 million market is the only one that may be softening now that oil
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appears to have hit bottom. a lot of thesis there. it always sold off. i've been very wary. and will to you stay away each time you asked me this time with limited supply, excellent demand. buyers fully accredited with none of that no doc nonsense. i think it is time to buy stock of toll brothers.
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rally nobody believes in continues. now it's broadened out to the banks. there's always a bull market somewhere. i promise to find it for you. i'm jim cramer and i will see you tomorrow.
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(male announcer) since the premiere of undercover boss, more than 60 bosses have given away nearly $6 million... (man) i have a check for $250,000. oh, my god. (announcer) and implemented sweeping company-wide changes... (man) as a company, we're actually gonna restore the 401(k). it's a million-dollar expense. (announcer) to benefit the lives of more than 40 million employees. whoo! some people, i just want to punch them in the face sometimes. (announcer) but not everyone deserved to be rewarded. someone's not sayin' something. welcome to moe's! i've had one minute of training. if you can't do it, then you can't do it. i know how to grow some really good weed if you're really interested. (man) i'm talkin' to you 'cause you come back here-- "i need dippin'. i need dippin'." y'all better chill. (announcer) tonight, the latest boss to put it all on the line is travis boersma...

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