>> but also could be vulnerable if something goes wrong. so with bank earnings and brexit, you're taking the week off? >> yeah, i'm going on vacation, back to the caribbean. mike, quick final takeaways. >> we're going to be looking at companies. the market is still at that level where it makes sense to slow down. >> that does it for "closing bell." thanks for watching. >> have a good weekend "fast money" starts right now. live from the nasdaq market site overlooking times square, i'm melissa lee. tonight on "fast," netflix nirvana. wall street bingeing on the stock. it is surging, up more than 40%. will the euphoria continue after its earnings report? plus, the death cross rearing its head this time on the 10-year yield. we'll tell you what it could mean for the bond market. we start off with the tale of two markets as we sit here on the eve of earnings, it's been the best of times and the worst of times for

stocks heading into the season on one page you've got apple and its major warnings, and on the other there's general motors with a forecast surprise sending the stock surging. so which one is the true tell of the market is this earnings season going to be a wreck or a refresh for investors. guy. >> two questions i think apple is more of a tell in terms of the consumer general motors guide higher is interesting. but if you go back to their halloween earnings report, their third quarter, that was the quarter in my opinion to buy the stock. i think the stock was probably trading around 33.5, 34 at the time it's rallied since this guidance makes eps growth probably flatter so valuation is compelling i don't think that's a tell in terms of the consumer. the real tell is apple and their inelasticity in pricing. earnings are the mother's milk of the market. >> what does that mean >> i've heard larry kudlow say that i'll tell you what it doesn't mean you better be looking for

another cow because this earnings season ain't going to go all that well. >> as much as it's nice to say one company is an entire indictment upon the consumer, first of all, i think apple's issues are apple's they have gone through a refresh cycle that's elongated we know the stories, whether it's a lack of subsidies, whether it's the chinese consumer under some duress right now. gm's story is all about a company that no one ever believes will hilt their numbers. every time -- >> so neither are tells. >> neither are tells look, the bottom line is every one of these is either company specific -- in gm's case, it's absolutely a secular dynamic in their sector in apple's case i think it's company specific. >> i look at the transports. i look at fedex telling you things are weak. i look at the airlines warning to me those are economy wide you can make an argument about apple, you can make an argument about gm i think yeti came out --

>> the cooler. >> yeah. you would think, big expensive cooler is probably the last thing you buy if you don't have scratch in the bank. but people have some scratch if you look economywide, fedex, airlines to me tell me things aren't going to look good next week. >> do you have yeti? >> i have the yeti koozies they're like 35 bucks. what i think is important, as far as apple, i don't think anybody expected the magnitude of the revenue miss that they had. that was important and that stock was down 10%. >> is that a consumer story? >> hold on, tim. >> she asks the questions around here >> fighting already, gentlemen >> we're talking about the consumer. >> gm, expectations were actually pretty low and then you have a situation here where they guide to a level here, there's

very few analysts that think they'll hit this 2019 guidance why would you in the second week of the yore after your stock has massively underperformed, why would you raise your guidance. >> what are you talking about? you're saying a company if their business is going well and in fact it's been underpriced because people look at the auto sector and say peak autos. you've been outlining this dynamic for a long time. this company is very, very cheap -- >> so it's been give or take like 50 cars andersen million for years and they have not been able to do it increasingly more profitable they have very little visibility look at the gaps. >> i'm not going to tell you the stock has done well. we've split them up. i'm not going to tell you the stock is outperforming the bottom line is the auto sector has been approved to me and every time gm has had a chance to reaffirm numbers, they have and the stockhas rallied. >> and then investors sell it.

>> but we're talking about whether it's an indictment on the core business or the consumer by the way, gm is a company that i think is very well positioned for robo drive and for effectively the ev world that i think a lot of other auto companies are giving an enormous multiple for i think the stock is undervalued. i love hearing that. i don't think the company should take a mulligan when in fact they get pushed around. >> how much is china gm's revenue? >> probably 20% to 25% and that's through their jv. >> two-thirds is north america. >> what fascinated me is gm's ability to raise forecasts so robustly in the face of the question marks surrounding china. you can say it's company-specific stories, but what these companies are saying about china individually, i don't know what to believe. >> you have one data point versus a plethora of data points maybe gm has something special going on that we don't know about. so that's the only thing, that's the only thing

that's it. that's all i've got. >> what's going on in the auto industry is structural you have basically supply that's inefficient, european production that's flailing -- >> but that's not a tell on the market that's an individual thing, specific to gm. >> i agree. >> or at least the auto industry it's not a tell against the market. >> canwe separate this conversation you think it's a gm-specific story. you think apple is a tell in terms of the earnings picture. are you expecting earnings to be disappointing or not >> from the broader market >> from the broader market. >> i think we expect an environment where most companies, especially in the industrial and cyclical world, will tell you about the things we've been hearing about for three to six months and i won't bore you with them because you know what they are yes, we have financials coming out next week. the banks to me as an entire sector are trading significantly cheaper than the bottom end of a range. i'm saying the faang at 8.7% pe

are very, very cheap and will not tell you how great the world is but you have to get back to a place where valuations really matter. >> i'm not suggesting anybody on the desk has done this, but all the way up in apple when apple kept raising their prices, people would point to the health of the consumer. if you make that argument, you can't say, well, it's got to speak to the health of the consumer or maybe their inability to move forward on the price curve. i do think it's a tell on the consumer in terms of earnings, it's shocking to me that the market, as resilient as it is, given the warnings we've heard and the s&p is up 10.5% or 11% since christmas eve. that's really interesting. maybe it's a huge setup to sell it. >> i said this on january 2nd when apple dropped that bomb i said this is the best possible scenario, especially after the volatility that we saw in

december, if you had a bunch of companies come out and just take down 2019 guidance this is what they said on the desk yesterday also. that's the issue i have with gm. the last few years every single time they have stuck their head out, it's gotten smacked down. the last time the stock was in the high 30, early 40s, what happened softbank invested in their autonomous drive thing and the stock is down. investors have used every pop as an opportunity to sell it. if i'm this management and knowing what the head winds are, i'm being more conservative. >> then they aren't necessarily doing this for the stock market. they're talking about their business and reaffirming they're executing on their targets i'm saying the company is wrong to report to the world that they're going to hit their number i don't get that. >> apple when they gave that guidance, they knew a whole heck of a lot more than they told,

than they guided to. these companies should have a lot of visibility, and then -- >> i think you're saying two different things i think tim cook maybe should be criticized for being very different two months after he gave a very different guide post, even though that guide post wasn't great. in gm's case, no one believes this company is able to exist in a new world where you've got electric vehicles and a world where labor costs have gone through the roof and they are forced to play in an environment where they can't close non-competitive production i think the company should be applauded. >> i think you raise a good point about tim cook and the guidance he gave the end of november versus the first of january. it was a very, very different story. >> but we've heard it from every company. >> that's my concern because the companies that have warned, they cited december as being -- something happened in december where people stopped spending in december and so for the companies that have not yet preannounced, you

wonder did they also see that switch turn off. >> i think you have to worry about that i also think you have to worry about the magnitude of the misses like apple did. the setup for the market going into earnings is not really great. we've had a massive rally up to 2600 on the s&p, anticipating some of the bad news is out there. now all of a sudden you get magnitudes of earnings warnings. that could be a problem. >> when you think about this, we still have steel tariffs with canada nafta 2.0 has not been ratified, they still exist so we have the china trade issues we know that steel costs are greater than expected. we have almost a million federal workers that are furloughed. these are probably people that would like to buy trucks, that sort of thing. >> i don't know. >> listen, this company is going to report on february 6th. and i guarantee you that it's going to be a very different report than what we saw today and a very different reaction. >> i don't really understand why a company reaffirming their numbers should be ridiculed

because they're not tanking it this is what i don't understand about this conversation. melissa brought it back to did something break down in mid-december. >> look at fedex fedex the same story. >> they came smoking out of the gates for the holiday season and something by mid-december petered out. confidence was shaken. >> which backs up the argument i've been trying to make, does the stock market cause people's spending patterns. >> you and your french tie. coming up, the banks will be the first sector to face the earnings music next week and you won't believe what the chart master is saying about the group ahead of their big moment. plus, netflix is up nearly 40% from the december lows dan says there is one chart that will tell you where the stock is heading next. energy has been the hottest trade of the year but it could be about to cool off he'll explain why. much more "fast money" right after this

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10-year yield entering the death cross. so are we about to see a fallout in rates >> no, i don't think so. first of all, the death cross -- >> are you poo-pooing it >> yeah, i am. if it worked we'd just be trading the death cross all day long number two, the fed has already told you they don't want a flat yield curve. if you think about the way they're going to structure their balance sheet over 2019, they want a steep yield curve the they want to do a thing called reverse operation twist where they buy the short end of the curve. yields are going higher on the 10-year. >> except that the fed i don't think controls the long end of the curve. >> they do with their balance sheet. >> except for the fact that if the market is taking the long rates down as much as that might imply, and i know you don't believe in the death cross, the fed is not going to be as aggressive on their balance sheet as they want to be. >> it's a reverse, though. they sell off the long endi and

buy the short end. you have u.s. government issuing 10-year, you have a ton of supply on the 10-year. >> that's if they'reselling of their balance sheet. they can't be aggressive in terms of -- >> but they take whatever they sell off on the long end and they buy on the short end. it's reverse operation twist that's what it is. >> remember the scene in "top gun" when maverick explains how he was looking at the mig but he was inverted that was what that whole thing -- that was fantastic. >> too close for missiles, i'm switching to guns, guys. >> fantastic. >> at any rate, i would say this in order for the yield curve not to invert, they're going to have to lower rates in the front end and that ain't happening because the back end i think continues to go lower. i think i'm in tim's camp and think that the curve will invert and will happen soon. >> falling rates and a potentially inverted yield curve, citibank now embracing

activists -- they are entering an information sharing and engagement agreement allowing for a deeper cooperation what should they try to do in my opinion? >> citi has to come clean with every european exposure they have and put it out for the market to understand the reason why it's trading below tangible book value is concerns with what they have in europe and that stems from all the problems with deutsche bank. >> this is when tim starts whining, what do you mean come clean? >> is that what tim sounds like? >> i've got to tell you, i think a big company like citi, to have these sorts of things is something investors should feel better about if the stock had to have like an 18% rally off of lows a couple of weeks, i'd say the banks are

pretty well set up for decent news to rally on further, but they kind of came back a bit so to me you have a whole group where they are range bound within this last few weeks >> our colleague wilfred frost, pointing out on "the closing bell," for instance bank of america last year posted earnings that beat expectations. what did the stock do? nothing. >> although what we've seen with the last i think three quarters, definitely the last two, banks have this lackadaisical reaction to earnings. as earnings have gotten stronger for other groups, banks have started to rally people underestimate the fact that nims are going to be actually better. the problem with what's gone on with mortgage rates is the mortgage business will be under pressure i think other parts of their business are healthy and i expect the numbers to be fine. >> you get -- value act is getting a value.

they're trading below book value. in my view unless you think there is a global recession in the very near future, and i'm talking about the next three, six months, then these are valuable at this point in time particularly if you think there's any steepening or no more flatteningin the yield curve and the economy is solid or smooth, not going lower, then you are right not buying the banks. david solomon will be on the conference call on wednesday. >> interesting. >> it is interesting because the only downside is him being on that call. >> i'm melissa lee you're watching "fast money" on cnbc, first in business worldwide. here's what's coming up. it's almost judgment day for the bank stocks and the chart master is saying good-bye to the sector he'll tell you what has him pressing the sell button. plus a number of pot stocks are surging today, but not for the reason you might think arolrstell you what has

shehde loving the high there's much more "fast money" right after this break

welcome back cannabis producer aphria announcing its ceo and co-founder will step down. leslie picker is back at headquarters with the details. >> ceo vic neufeld is leaving in the coming months. the company did not appoint a new ceo nor did it specify whattin ciwhat incited their resignations hindenburg research said aphria had been diverting 700 million

canadian dollars towards unscrupulous transactions. they said they were buying assets in latin america that were effectively worthless to line the pockets of insiders shares plummeted more than 25% in december as investors digested that report aphria said in connection with a latin american acquisition in september it received a fairness opinion from a firm but the board announced it had formed a special committee to review that deal while reiterating its confidence in the process leading to the acquisition the company has not yet disclosed their findings from that special report, although they noted this morning that the committee is making good

progress they announced second quarter revenue of about $22 million in connection with the executive changes. today it closed up 5%. >> leslie, thank you leslie picker back at headquarters insiders would not be selling to the lock-up period which expires in the first half of this year. >> if you're investingin cannabis on a market cap weighted basis, tilray will move the market around. if you look at the cannabis sector overall, it's actually up 35% year to date off of these depressed levels or christmas eve lows which takes you right back to maybe 5% above where this market was before the constellation deal in mid-august so i'm not going to argue for fantastic valuations all i'll say is very simple n an

industry like this, whether it's a new asset class with smaller companies, newer companies or bigger companies, corporate governance is essential. i think you have to do a lot of extra work here. the capital structures even at tilray, which i'm not suggesting there's anything bad going on, i'm saying the capital structure is a big reason the stock has moved the way it has so please do your work because it's a very complicated sector and that's what moves these stocks. >> were you worried about the corporate governance at aphria >> a lot of people thought this was one of the bellwethers in canada vic neufield is a person who had success in the vitamin industry. they do have assets and are producing. there are some insider transactions that look very dubious. look, this investigation, there's some bizarre elements of this investigation they haven't announced anything and you have people stepping down but there are real assets at this company. >> and there are other companies. if you don't want to go into the

pot space, there's novartis, there's constellation brands. >> they're basically telling you their business is deteriorating at a rapid pace. at a certain point valuation makes sense. i don't think you're there yet. time for the final trade on this friday. let's go around the home. >> i like that gm has reaffirmed and is running their business as efficiently as they can. i think the auto space while maybe not that interesting, this is the best of them. i say don't be fooled by the ridiculousdeath cross which never, ever works. that was a little strong worded but i feel that way. >> key words by tim there, you don't have to buy gm tomorrow. i think you'll have an opportunity to buy it much lower in the coming months here. >> guy. >> angry show tonight for a friday. >> it's just spirited, that's it. >> into football weekend netflix reports on the 17th of

january,s next week. you saw an upgrade today i think you'll see upgrades monday and tuesday and i think the stock will continue to rally into earnings, melissa lee. >> that does it for us we'll be back here monday at 5:00 "options action" starts right after this break ♪

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hey there, welcome to the nasdaq market site on this frigid january friday. the guys are getting ready behind me. in the meantime, here's what's coming up on the show. >> always go for the throat. buy low, sell high fear, that's the other guy's problem. >> and selling high is exactly what mike coe is doing with energy stocks. he'll tell you why he thinks the ride might be over and why you should trade it if you do too. plus -- >> you shouldn't like things because people tell you you're supposed to. >> and dan nathan says that's exactly how you should feel about netflix stock. he'll break down how he's playing the name after the