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tv   Mad Money  CNBC  March 6, 2017 6:00pm-7:01pm EST

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>> look at guy. he's like an eagle. >> thank you. >> salesforce.com. >> i'm scott walker. catch "fast money" again 5:00 p.m. eastern tomorrow. halftime of course tomorrow at noon. my mission is simple, to make you money. the i promise to help you find it. mad money starts now. >> hey i'm cramer. welcome to mad money. welcome to cramerica. my job is not to just entertain you but to educate and teach you. call me or tweet me at jim cr e cramer. be bold but only if the risk
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seems less palpable than others may grasp. these words may always be on the tip of your tung if you're investing on days like today. nasdaq declined .37%. they help you avoid the real pitfalls all investors face. the late great mark haynes said. eight years ago this week. i love that call. i hoped you did too. it was based on haynes recognizing the risk reregard had gotten out of wlak. we had seen a kre sen doe that was way too loud and way too yun formed. remember, this was 2009 when the dow was around 6,600. it is one of the best if not the
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best in history. to give you some context at that time i had been negative on stocks all the way down at one point telling people if you needed money in the next five years you should pull it out of the market. here is haynes down from when i said that. as fearful as you might have been the big decline had become too unsustainable. it wasn't time to sell anymore. it was time to buy. >> buy buy buy. >> i will step out on a limb here. i don't think we are at a bot testimony. -- bottom. >> i talked to him about that bottom call. i thought maybe i got to get with the program. i did. he made so few of these big calls you have to listen. haynes had rules about when emotion had over ridden logic and panic was peaking.
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at last he had seen enough. i asked him how sure he was and he said pretty much everything he had been waiting for had happened. he had no choice. imagine this because i'm now hearing this about the other side of the trade. people are saying pretty much everything a bull could want which means we are in a moment of recklessness unless we start dumping stocks. the president accuses his predecessor in a modern day version of nixon and watergate. just a week ago trump seemed downright presidential when he spoke to both houses of congress. he was so pragmatic you could almost imagine democrats wondering if they could break ranks and support parts of his
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agenda. then this tweet about obama's alleged wiretapping seemingly based on something you heard on talk radio killed any hope of bipartisan ship it is so many believe are necessary for the next leg. then s & p 500 up 11% since the election even as reasons keep getting pushed back because of the disarray of republicans in congress. yet people keep buying stock acting as though all is well. aren't they being complacent? isn't this the opposite of when haynes made his wbottom call? haven't we ignored the risk that comes from a huge run? let me tell you where i come out on this. today on halftime report we have a number of people saying we could have a huge pull back because of these concerns. we heard about them.
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they weren't all on the set. i smiled. -- it was filled with articles about how the market couldn't last any longer. they always said a half dozen managers who have gotten defensive because they regard the market, that's hardly the stuff of euphoria. i struggled to find anyone who is euphoric. not me. i just think it pushes it out. it's okay. 2018 is fine. i like how disappointed so many money managers seem to be. i believe many are traditional republicans by nature. think think he is too dangerous, like a taller version of kim jong un, you know what i mean? we have to realize the global economy has gotten better. almost every market i follow is
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up or maybe even ours in some cases. none of these countries have trump at the helm. you keep interest rates low enough and it was bound to happen. that's what's going on. with some restaurant exceptions ours have reported speck tack already nur -- spectacular numbers. in short not nearly as much euphoria as you would expect given the strength of the earnings we are seeing worldwide. no doubt it has had magnificent runs. i looked over the chartds and found ten groups that are all flies high. it is hard to we rat kaall of t
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action. in fact only the restaurant and retailers seem to be rolling over. everything else seems to be doing just fine. it is hard to imagine what could sink all of these leaders at the same time. by the way, snap rolled over. right at 40 billion, bingo. i know stock markets seem expensive but what if earnings keep coming in hot? what if we get relief from washington it's just pushed out to 2018? we have plenty of negative by the concerns of the stability of the administration, ability to get things done versus the global economy improving. the president has had a remarkable impact because nay feerd -- feared executive -- so if you put it all together what do you get? i think you have a situation
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that's not the polar opposite of the haynes bottom. no. it was almost impossible to find bull, someone who believed the market could go higher. he was the only one left. haynes style top is where everyone was bullish. it is hard to believe people will go much higher. the skepticism towards stocks, about three hedge fund managers or five were pulling all of their money out. that's what i keep reading. those are what color are thinking. but i believe these big money managers are haters, not skeptical buyers. they find themselves wanting to sell anything in a moment's notice on any story, which brings me to the bottom line. this is absolutely not a haynes top moment. i knew him well enough to bet if he had to make a call right now he would say too much
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skepticism. it would keep it in, not out until everyone was cheering. to me cheering, that's not a sound i hear much these days, not at all. susan in south carolina, susan. >> yes, sir. >> how can i help? >> caller: okay. i really like your straightforward opinions, but i was brought up old school buys blue chips and taught you were in the market for the long term. >> okay. that's right. i like that. >> caller: okay. i owned ge since 1984. i'm trying to decide if i've held it long enough. i have become very comfortable with it. hasn't changd its name, is it time to get out and concentrate mainly on some solar or wind turbine? >> it is the leader in wind.
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i was writing a speech and i came up to ge. i said we are paying for something good to happen. paying to wait with that dif de dend. i think it stalled and other stocks aren't stalled. if your willing to invest time in the wilderness, that's what you're going to get, wilderness and dividend. >> caller: beautiful sunny southwest day. >> fantastic. >> caller: i have a question about alaskan airlines. what do you think would be a good time to sell? >> this is one that i just -- it's right up there with southwest air. i don't want to sell it. i saw the stock down a couple today. i said i should be trying to figure out how to work in alaska
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air. i don't want you selling alaskan air. you really want to be able to say i want a pretty big position and pull the trigger. today we reflect on the late great mark haynes. i think he would say there is pl plenty of skepticism. don't go chasing yields, please stick to the rivers and mak lakes that you're used to. domino's delivers pizza to your home in 30 minutes. will it make your dough rise? and what can you tell us about the health of the restaurant industry and the health of its own numbers? i'm talking to the ceo of well
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it is so important when you see a stock with high yield you need to stay the heck away from them. i know you called on these a lot on the lightning round. i don't care how cheap the stock seemed or tempting it looks. a super high yield is almost always a sign something is very very wrong, and you need to run. sell sell sell, not walkway way as fast as you can. one of these small
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communications providers with a 15.2% dividend yield and $2.76 stock. might seem tempting but it's always most always a mistake. you want to start with the first and most obvious reason. how did it become a $2 and change stock? well, its share price got obliterated, that's how. frontier was at $8 and change in 2013 and over the past couple of years lost more than two-thirds of its value. a 47% decline in the past six months. that's almost always the case with super high yielders. dividends don't get this big because this company keeps raising pay out. they get this big because something happens to cripple the price of their stock. what exactly is wrong with frontier communications? for starters as tan owl school
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phone company. fewer and fewer people using their land line. competitors can afford to crush these guys on price if they feel like it. this stock has been trending lower. frontier managed to rebound a bit through early 2015. the reason, for a while it seemed like the demand was so great that a rising tide might be able to lift all boats. the company spent millions upgrading their net yowork. right around the time that the stock peaked the company announced it would buy verizon's california, texas and florida business for $10.5 billion in cash. holy cow. keep it a few years after they did something buying wireless operations for 5.3 billion. i guess it seems like these were worth owning given the boom in
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demand over the web. verizon wouldn't have been selling it if they thought they were worth owning. in the end frontier spent more than $15 billion buying a bunch of what i regard as declining assets that can't really be turned around. when frontier peaked this stock had a reasonable 5% yield. no red flag there. since then the yield has gone off the charts. how did things go back in when you look back the last time they managed was the fourth quarter of 2014, right before this big decline got started. after that the story turns into an endless parade of woe. when it reported in may of 2015 it posted a top and bottom line miss with net broad band subscribers. the revenue miss her was stunning because they applied att wireless business in 2015. it is a an accumulator.
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i don't want to pin all of this on frontier. you don't need to be a genius to know the industry has been if decline for years thanks to the rise of mobile and frontier competitors. frontier shrinkage was worse. all the way down in 2015 frontier had defender. they would say they are overlooking all sorts of positives. the acquisition and every now and then they even do something right. a little over a year ago they were able to report the half way decent in a while. even here though there were warning signs. sure, frontier took it from larger cam kom pet tos but they did it but cutting prices. price wars can be ruined for
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your earnings. sure enough then things started to go very wrong. frontier reported not so great in august and management said they suspended marketing activities during the quarter resulting in a slowdown. many analysts remained bullish about the ability to keep paying divide dividend. the truth is that all along frontier was fighting a rear guard action. this all came to ahead early last november when the company posted an ugly top and bottom line miss. this is when the analysts started. the next day it dropped nearly 14%. the core problems, even with the addition the company hasn't been able to generate any kind of sales quote. it decline bid almost 10%. the broad band business showed continued weakness. they actually lost broad band
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subscriber. far long time it was the only part with any strength. it brings me to last week's report. man, again, it was a -- it was really ugly. a 12 cent earnings loss when they were looking for a 5 cent loss. massive cut to the company's free cash flow. they took a $45 million revenue charge. it got one and picked up verizon and california assets, imagine another $25 million charge would be coming in the next quarter. the verizon deal is looking a lot less attractive. while they planned to talk about how they plan today get more aggressive the truth is you can't cross cut your way to revenue dwrogrowth. that's why the stocks started trading down. what about that dif dent? isn't it compelling? aren't they totally paying do you wait until they turn around
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the business in sure but only if they actually turn things around. frontier sales and earnings keep declines then sooner or later it will have to be cut. right now the company should have more than enough cash flow to cover the pay out spds if they can hit their targets. let me put it another way. a year ago frontier had a 7.5% yield. if you were tempted then sure, you got to annual dividend. share prices come down as of today. your loss isn't worth anything you would have got from that darn dif dent. i don't see why it should be any different. it is simply a sign showing you have got ksh how things have gotten even more dicey. here is the bottom line. i don't mean to single out frontier communications. these guys aren't morons. they are stuck in a bad place.
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the phone business that is a long-term secular decline. if you take only one thing away it's that it is a dangerous game. a sky high yield is almost always a sign that something is very wrong in the core business. and if you just looked at the red flag of frontier's yield you could have sidestepped most of the stock's recent decline, very little of which was made up by the dividends that you received. provine in georgia. how are you? >> caller: i'm good, jim. jim, i wanted to know about how it will do through the end of the year. my average price is around $18. do you want me to take a perfect? -- profit? >> no. i have a conference call over which ones i really like.
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i think it's really reinventing the company. he will have a lot of wifi and a lot of things ciscoe didn't have. if stock comes down, buy buy buy. >> thanks for taking the call. >> of course. >> caller: let's talk micro chip. it shows hockey stick in sales growth, management discipline can this keep going? >> you know, this is a great company. i actually believe in micro chip and i think that you're fine. it is up gigantically. i think you're fine. i love the space that it's in. i think at these prices is actually better than micro chip.
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all right. do go chasing high yielding stocks. this is a really important take away. why not stick to the dividends you're used to? i know you want income but if you went to frontier i think you made a wrong move tlch. there is more at domino's. how does he continue to deliver when the rest is struggling? i have the exclusive. i'm talking with a company that powers from mcdonald's to disney world. and one set of stocks to everyone is calling unsustainable, i guess you could say i'm not exactly buying into their logic. i'll fill you in. stay with cramer.
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how does domino's pizza do it? domino's still managed to report a dazzling better than expected quarter last tuesday including a 12% plus increase. i keep telling you domino's is one of the best out there on stay at home economy. it makes it incredibly easy to order a pizza directly to your house without ever having to speak to another human. their app or web site is the way to go. i have been recommending this since patrick doyle came on the show seven years ago. it is now $190 plus special dividen dividends. let's talk with the president of domi domino's pizza. welcome back to mad money. >> thanks, tim, appreciate it.
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>> all right. this is one we have had many times where the dri stri has done well. this is where the industry didn't do well and you did much better. what do you think was behind this double digit game that took everybody's breath away? >> it really continues to be the same story, investments we have been making in our food, in our technology, in our stores. you're seeing the results from that now coming through in the same store sales growth domestically and internationally. we continue to find places that we can improve the experience for the customer and as long as we are making investments that do that, that kind of permanently improve the experience for our customers and we think we will continue to grow. you list as your partners apple, am zon
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amazon, google. >> a yeah. and you can order an their platforms. so we look at the ability to reach our customers, and those are the platforms where they are spending time. they are on google home. they are using their iphones to order. all of those things are ordering through facebook messenger. all of those things are an opportunity for us to engage with the customers. those are kind of the big players in technology and we have got to be there with them with our customers if we are going to grow our sales. >> let's stick with this. if i go to headquarters how many of the employees there would be considered technologists? >> basically half. we have about 800 people working in our headquarters here in ann arbor. 400 of them including our contractors here are working in technology or working in analytics around all of the data getting created on this platform. that's certainly a big part of
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the story. at the same time our franchisees are making great pizzas. that's ultimately what keeps people coming back. >> in the many times we have talked to each other you talked about the advantage you have over the smaller regional and the mom and pops. this one seemed to b a different one. you took some share from the big guys. i was on the papa john call and they were talking about 8% decline. i see your ads all of the time in the nfl. were you hurt by the nfl's declining rates? >> no. we clearly were not. ratings may have been off a little bit. clearly we had a terrific fourth quarter. i will tell you, i mean we did take share from, you know, from the category overall and maybe a little bit more of it came from the larger players, but if you look back over the course of the last five years or so, probably
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80% of kind of the gains we have had have come against the smaller prayers, the independ t independen independents, regionals, much less of it has come from the larger players. >> we have been using you to this whole theory about the stay at home person. what happened in the culture? why did this occur? we are out of the great recession. we know people have more disposable income than they did. there seems to be a major kmache in the way people eat and how they entertain themselves. can you give us your part of why you think we are a stay at home culture now? >> yeah. i think what's happening is there is a great convenience now for ordering in wlrks it is your food, whether or not you're ordering off of a web site from any of the different e commerce retailers. i think what you're seeing is people still clearly go out but
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it's got to be special. there's got to be something special in a restaurant or retailer that is drawing people in and giving them this very different experience than simply going in and buying. if they are just walking into a store and grabbing somebody off of the shelf it may be ease sirrer to stay at home. in restaurants, if you're giving somebody a really special experience, you know, think you'll continue to drive traffic into your restaurant. if you're not it's terrific and easy and simple for people to stay home and order in pizza from dominos. i think that's what you're seeing. i think if you have a sit-down restaurant that the not doing something really special then i think you're going to hurt. if you're doing something that's giving them a better than average experience, something that's memorable then they will invest the time to go out and
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east in your restaurant. i think you're seeing that split between convenience that's driving our end of the business or those doing a terrific job, you know, for that dining in experience. those are people doing well. you seen fine dining has been doing pretty well. >> right. >> over the course of the last couple of years. it is kind of the people in the middle that aren't doing something really different that are struggling. >> did you see it coming in the technology was brilliant. they are on facebook. you seem to know. are you going to do snap? do you have something with snap going? >> we are not talking about anything we are doing going forward. we started investing heavily and brought it all in. that's when we really started this journey. you know, it's interesting. i look at our business and how it's transformed from being majority over the phone to being
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majority digital. you know, there aren't a lot of players that have done that. you look at what netflix has done and is one you talk about as kind of the stay at home theme around investing. they went from a purely physical, you know, sort of approach to digitizing all of that and making it much easier. there is another one on that list. it's not a long list of people that have gone from being the old story to the new story. >> it's not a long list and you're at the top of it. congratulations. great to see you. >> thank you. >> it gets higher and higher, bigger and bigger. listen, it's also a pretty good taste of pizza. mad money is back after the break.
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there are a few things we like around here more than a good spin off. they really don't belong under the safe roof. sm n that case spinning off one as an indetpendent company. it is a make over kitchen equipment which rebranded itself and will trade under wbt. it used to be part of the machinery make their mostly sells reign cranes. the kitchen business was being ignore bid management and investors. that was a roughly a year ago. since then it is rallied roughly 40%. i was surprised it had more room to run. let's dig deeper. he is the president and ceo of
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well built. to learn more about how his company is doing welcome. >> hi, jim. >> have a seat. >> thank you! first, why the rename? >> well, i think it was a back to the future strategy. mine we wanted to cut off the last tie to the company. it was the leader in the last century. it was found in 1929. there is a lot of pride with welbilt. we are the heart of the kitchen. so it is natural. >> i was reading over your conference call. i was saying i hope they didn't mind some of the things i was sayi saying. you said it was obvious this food service business had no home in a crane company and senior leadership never appreciated the food service space. the business was underfunded and undermanned wasn't it? >> yes. i think it was two very different cultures.
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the crane business tends to be long-term oriented, heavy machine machinery. it is a fast-moving consumer type. these never went together. plus the business had over capacity. the business had complexity. so business simplify case. i think that we achieved in the first year i think it was energy around welbilt. >> what does it mean for people who own shares? >> i think it is very positive. first of all we refinanced. we got the biggest reduction of all bonds that were repricing since november. 170 basis point reduction plus 1%. it is positive because it will be positive for the eps. shareholders will love it and we
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like it. >> you are up against difficult come fete pet tos. how do you differentiate? >> i think the main differentiation we have is our long-term strategy. we are the only full line equipment provider in the kitchen. we have a full hot line, cold line and bev lajs. if you see it, they want to buy from companies that understand the entire kitchen, the system of the kitchen. we are moving from selling appliances to selling entire kitchen solutions. we have that company plus an integrated and it sets us apart from most of our competitors. >> a lot of the big problems when you really have a business is a high quality problem. but you have a lot of technology in your different machines. is it helping? are people looking to you for help? >> absolutely. people are looking at first of all cost site. we help them reduce energy cost.
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kitchens get smaller around smaller. we help them reduce labor costs and help them on the output side. when you get a kitchen with all of our equipment in there you have paybacks that are some times less than a year. that is what our customers are asking for and that's what we can offer them. >> you have a -- it is incredible. we have domino's. do you work with domino's? >> absolutely. they are a good customer of ours. >> do you have the whole for anybody or just a piece of come minn minn -- domino's? >> we have a nice balanced portfolio. 50% is with general market. the rest raunlt around the corner served by the general marketment we are happy to have
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bo both of these. >> i know you assembled the parts. i would think it is a good business to be in. >> it is a very good business. we focus on the after market parts. >> really, i love your business. it is fantastic. this is the president and ceo of welbilt. this is a much better company. and even though i know quick service had some little bit of slow down the guys with the best technology will win. mad money is back after the break. what if we could bring you better value
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duringexperience our most perefined models ever.t, including the ls, lx and es. experience amazing. it is time. are you ready? time for lightning round. we'll start with bob in north carolina.
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>> caller: thanks for taking my call. my question is about at&t. even with the large gain and dow at&t only gained 8 cents since closing. is it time warner merger causing this stagnation and would you be a buyer? >> i would be a buyer. 4.67 yield. i think it pays to be a buyer. larry in colorado, please. >> caller: thank you for taking my call. my name is larry from colorado. i would like to have your opinion, sir, on cabella's. >> i thought thaw would go the way of being taken over. i don't want anything in retail, literally, nothing. nothing. let's go to carson in texas, carson. >> caller: howdy. about a month ago you mentioned wrd could be. they are down 18% now. thoughts in general.
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>> we got to get more cold weather. restrilkting the number of oil and gas stocks i'm recommending right now. we got to see a little more drainage in natural gas and a little more cold weather. it's not coming together. tony in utah, tony. >> caller: thanks for taking my call. how are you? >> all right. how are you? >> caller: doing well. i'm excited about cara therapeutics. sounds like a very exciting method. >> that would be unbelievable if they could do that. we got to do them on or do homework on it. so i want to do more worng that. that's a great idea. glad you brought it to our attention. let's go to jeff in arizona. >> caller: i would like to know what your thoughts are on roper technology. >> a very good basic industrial.
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i like that i have not done enough on. that's a great stock though. this is the end of the lightning round. hey! i st wanted to thank your support team for walkinme through my first optio trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on optionstragies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot ur french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade.
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it all. a year ago we valued bank stocks based off of their book involve especially most hobbled by regulation. consider the battle over bank of america's evaluation. last year at this time stock traded between $13 and $14. they argd it deserved to trade at trangible book value. without government approval to buy back stock or return a lot of capital in the form of dividend who cared about book value? you're not going to break the company up. the baj's kpaetness was an abstraction in an unrealestic treasurety department. the week before the election with hillary in the lead bank of america flirted within pennies of the $16 tangible book value. i think it was being built up in
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anticipation of the idea that elizabeth warren, the bank's nemesis in the senate would be the new overseer. we can't even imagine what show would dream up. then we got a surprise election that changed everything. there was no doubt that he understood what the banks could do if they were allow today lend more aggressively and be unshackled from burdensome regulation. bank of america stock goes to $20 in six sessions, six sessions. you blink you missed it. so many investors blinked, so many missed it. the stock caught a smooth downgrade that suggested it was too much too soon. come on. after trading around book value for years bank of america trade a ridiculous premium of the book. unsustainable, right? wrong. it turned out to be pretty darn
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sustainable first because the economy started creating job growth. then the mean metings with trump began. the cabinet filled out and next thing you know you have a bunch of former goldman sachs guys and they become the first of the regulatory regime. you had to get past the notion it wasn't near the crutch and didn't immediate the crutch of book value anymore. without the government breathing down its neck and feds raising rates you could put whats known as a price to earnings multipresident in the stock. why not? they reduced fool prproof earni. bank of america likely earning $1 $75. the notion with the largest deposit base in the country should sell at only 12 times
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earnings? that was absurd. theks thing you know you have a $25 stock with all of these negative analysts left on the side lines. we have a fed meeting on the 15th of this month. we now need not only one rate hike baa pledge for many rate hikes or the banks will most certainly get hit with a selloff or do we? it still sells at 14 times the earnings for a company that has loan growth, a better stock market, less regulation and dividends and big buy backs. i think the answer is clear. you let it ride. when bank of america was at 23 bucks and so many said sell sell sell i said what are you going to sell it for so you can get back in at 21? turns out you couldn't. now i feel the same way about $25.25. can you get back in at 23? i doubt it.
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you can see the battle. it goes on every day. it's grulg because in the end so few firms got it while so many missed it. so many will keep missing it because this is a new world order people that may propel the stock ever higher until everyone understand the new normal where ever a decade would could value bank of america on its earnings. i think this one has more room to run. stick with cramer. during the lexus command performance sales event, experience our most thrilling models ever. including the exhilarating is, gs and rc coupe.
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♪ experience amazing. we're drowning in information. where, in all of this,
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is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. tonight at 10:00 eastern luxury cars, private planes and fancy vacation homes all funded by lies. world famous collins street bakery gets sticky fingers and steals over $60 million to live the sweet life. don't miss it. i'm jim cramer. see you tomorrow.
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>> welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." ♪ who set out to solve a problem she faced as a mom. ♪ hi. i'm ginelle. i am the owner of cool wazoo. i'm here seeking $65,000 in exchange for 25% equity in my company. when my daughter was younger, she was burned on a park swing.

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