of corporate america. >> and of course, you know, vaivai valentine's day. >> is that a catalyst? is there some seasonality there? what happens >> there actually is. >> it means we're halfway through february that's what it means to me. >> certainly given positive impetus. that does it for "closing bell," thanks for watching. "fast money" starts right now. live from new york city times square, tim seymour, brian kelly, dan nathan, tesla hitting the skids as competition ramps up and adam jonas says it's about to get worse and tulip mania 2.0. one wall street firm is calling the cannabis craze a bubble of epic proportions that is about to explode we'll have all the details. goldman sachs ceo david solomon telling cnbc there is no

recession in sight stocks rallied for the second straight day the dow and s&p closing at the highest level since early december in one sector in particular is catching fire. check out energy leading the market today and up more than 20% from those christmas eve lows the group on track for the best quarter since 2011 is there more room to run? ♪ >> dancing getting my groove on here. the short answer is yes. one of the sectors we talked about was energy and health care energy i think still has room, despite my negative view on the broader market i think energy can continue to go higher. a couple of weeks ago we played this great game traded or faded, and exxon mobil was one of the names, and i stood and looked at tim seymour. i said you know what, you've got to fade this suckerment i thi i think it's going to trade down to 68. i'm talking to the people at home now look what it's done over the last couple of weeks

exxon mobil goes higher, as does conocophillips holly frontier's had a great couple of weeks as has anadarko petrole petroleum, despite my negative news on the broader market, i think energy goes up. >> i'm looking at you, and i tend to greagree with what you'e saying there's a couple of things going on, the confidence level have changed dramatically in the last three or four weeks. the fed is ultimately going to help you in terms of your dollar, although the dollar has been somewhat bullish over the last three or four, call it two weeks. oil has performed very well. the most important things are it seems to me that opec and non-opec have their dynamics back together. they reaffirmed they will be cutting supply they will not be pushing more heavy sweet and crude going out on the back of the venezuela cutbacks the dynamic in terms of supply is in pretty good shape. then you had the iea come out

and say we're going to get 1.4 million barrels a day. that's reassuring. opec was lower than that if you want to look at the fundamentals in terms of supply and demand, you've had a lot of good news. >> every day we have a conference call in the middle of the afternoon. this is a peek behind the curtain for viewers. we exchange ideas. we talk about what gets us jazzed. >> it's an exciting time we live for it. >> brian kelly you said i love it i'll buy everything energy you couldn't be more bullish about this >> this has everything i look for. so the biggest thing that got me today is at 10:30 we had oil inventories. it came out with a built, yet oil went up, so whenever i see price action like that, bad news or bearish news, bullish price action, it makes me go hmm the second thing is we have terrible economic news out of europe china east still not doing well. you have all these negative factors that should be bearish for oil, yet oil keeps going higher

you look at brent crude, which is what tim was talking about. that looks like it's breaking out higher a stronger dollar should be bearish for oil. oil keeps going higher whatever you think about it, the bottom line is this thing is breaking out you want to buy everything in the energy sector you can get your hands on. >> everything? >> you know within reason. >> buy buy buy. >> there you go. yeah you guys are making it sound like we didn't have this precipitous drop we've had in the last four months the oil crashed four months ago and the fact that it's made up a third of its losses in the last four months. you guys were talking about exxon, chevron, conoco those three stocks make up -- the etf that tracks the oil and gas sector that thing seems kind of stuck at 65 bucks. let's put that out there i'll take it back to 8:30 this morning. we got that cpi, okay? one of the reasons why people are trying to get more bullish or constructive on equities right here is because the fed is supposedly off the table

our friend peter bookvar had a good note about inflation. he said don't tell me there's not inflation. food and energy up 2.2%. what do you think is going to happen if the fed comes back into play or people start saying inflation's running a little hot here maybe the fed's back on play we might start to see the sort of volatility and risk assets we saw four months ago. >> i think that risk is less than it was before the fed has told you they're willing to tolerate a little more inflation than what we've tolerated in the past. i think that's off the table secondarily, as long as you don't have run away inflation, then you want to be in stocks this an inflationary environment. >> i want to point out something, commodities rally when there is inflation. the whole point of when you want to own commodities is when we have inflation and it's starting to run if we are getting more inflation, you want to own oil the second thing is you're right, oil got crushed and whatever the dynamics were, you can make an argument that positioning in the energy sector is the most important reason why

you want to. i talked about fundamentals. i pointed out the short interest in the sector is at record highs. it tells me that people don't like this trade. the fact that the xle has outperformed the s&p by 700 basis points since the low of the markets tells you, again, we know the pain train is higher. >> what seems to be slightly different is what's happened in the past couple of days and that is that we have learned that opec has been standing by its production cuts and that stau d saudi is going to take off half a billion barrels per day more than what they pledged at the meeting. you do have supply being kept in check, and that's an incremental part of the story. >> all inventories were up 3.6 million barrels. that's 50% more than the street was looking for, and crude. >> still rallied. >> in spite. in terms of the fed being focused on inflation, the only inflationary thing they're looking at is the the move in the s&p 500 respectfully until that sucker gets back to all-time highs which we're still

a ways away, i think the fed's probably on hold they told you that that's the facts i do think energy on a benign tape, stocks can continue to go higher. >> i have a question, at what point does a strong dollar start to hurt energy prices? it could be any day now theoretically because that's the correlation. >> it is a correlation, but it's dependent on why the dollar is strong if you have a strong dollar and a very weak global economy, yeah, that's going to hurt oil if the reason why oil is going up and copper, people are getting excited about and all these commodities going higher is that they're betting that the economy's going to get better. we're going to sign a trade deal with china and all of that, then oil and the dollar can go up, but the risk is to your point at some point higher oil prices make higher interest rates and the fed can put cold water on it. >> a year ago at this time, expectations for fed increases or rate increases are off the table. this is for 2019 what happened? once we saw the dollar start to go up, we saw crude get nailed

everybody here is looking at the dollar saying it looks pretty constructive there's no expectations or rate increases in 2019. if we have inflation ticking up further than that 2%, but somewhere, maybe it's above 2 1/2. i'm just saying, we got the fed back on the tableme then do you see oil stocks crater again >> between here and there, you can make money we're talking about six months from now >> if the fed is back in play, everything that we want for oil and everything we want for markets is in play again, we want growth. we want inflation. we want things cpi to me, i think peter's work is some of the best out there. i agree with that. i don't think this is a dynamic where we're worried about inflation. i'd like to see -- i think the reality is the dollar is moving higher because we've had a lot of weakness in europe, and while of course a flight to quality could come from europe exploding i talk about that all the time we're talking about 1.5 to 2% over the last two weeks.

it's range bound the dollar's been range bound until last july. until i see otherwise, that's where we are. >> just to button it up, i think the fed should be in play for a lot of different reasons it's clear their mandate is to get asset prices higher. until the s&p 500 gets to anywhere close to 2,900, i think they're on hold. i'm not suggesting that's right. i just think that's the way it is >> as the markets continue to rally, one technician says it could be time to ditch growth for value. let's go off the charts are mark newton of newton advisories. >> what are you looking at >> hi there. we've seen a big rally and a bigger period of uncertainty you take a look at the s&p, we've moved up 400 points in 33 trading days, that's about 17% or a half a percent a day. let's take a look at what the key levels are initially 2630 that was the first level that most people thought could stop this rally. then we got above 2715 that was the second level. if anything, the market still has a lot of upward momentum on

a weekly basis what are the near-term concerns? one, treasury yields are not following stocks they've been subdued you're starting to see more of a defensive rally even in the near term utilities and staples have been number two and three in terms of performance over the last five days you're also seeing a little bit of signs of near-term momentum deterioration. you want to watch for evidence that this rally could be starting to show short-term signs of peaking out my thinking is in general it is a good move. we've gotten above key levels. that would be something to buy into the sentiment has gotten incredibly sub die skdued what else are we looking at? technology i don't like technology here i think we've had a big move however, we've gotten up to levels that really are important when you look at the 200 day moving average this was important throughout most of the last couple of years. if anything, you look at equal weighted tech. that's also up near former highs. what should we look at what to

go into? i would suggest financials make a lot of sense here. this sector has been under pressure now for the first time really in the last week we're seeing xlf break out above the entire down trend since last september. that's where this group peaked out. if anything, financials are starting to gain a little bit of steam at a time when technology has been very over bought. what financials would you want to buy i still like financial tech, the credit card processes, visa, mastercard however, jpmorgan stands out to me as being really interesting here, only because we've gotten above this prior area of former lows that really held the stock the entire way down. now we've bounced and we're getting back up above this just in the last couple of days berkshire and jpmorgan make up a lot of xlf this seems to be one to follow in thinking this rally can continue. >> just to bring you back into the conversation we're having, where does energy fall into all of this? >> energy has gotten a little more corrective. we had one of the better months

in recent memory in energy in january. that was given back over the last month i think the move in saudi in the last couple of days is really constructive for wti and so i like xle i like oih i think those are better than things like the exploration and production area. i think crude rallies to the low 60s. energy is probably something to still favor during a bullish time of seasonality. >> mark newton of newton advisers >> i like mark's work. if he's telling me the s&p is stalls out here, i could look at the financials, look at the bank stocks and say they have stalled out. they are down in this month verse where they were at the end of january once they all had been done reporting earnings that were actually not bad and so i look at jpmorgan two weeks ago it was 105 it's 103, bank america, the investment banks, morgan stanley and goldman sachs act horrible morgan stanley is one of the worst looking charts in the

entire market here the i agree with his broad market call i don't know that you would go into a group that has underperformed over the last two weeks as the s&p has made new highs consistently on what feels like vapors. >> you make some very good points let me give the other side let me give you the bullish case to it. we just talked about oil going higher, about inflation picking up what's going to happen to the yield curve? that yield curve is going to steepen. it already is a tiny bit if that happens to the extent that investors think that the yield curve drives bank earnings, that is positive for the banks. >> i feel like bk is very bullish tonight. maybe it's a bull suit he's got zipped in the back sl that's a guarantee the market's going down. >> i will tell you my view is the same i've had on financials in the last couple of months i look at money center banks, banks are telling you it's a recession nar economy.

regional banks, a driver for that sector, regional banks trade well through their long-term pe around 9.2 times versus 9.8 to 13.5 banks are cheap by any metric, and that's the most important thing. >> coming up, two big after hours movers, mgm and cisco both out with earnings moments ago. we are monitoring the call to bring you the latest. >> plus, more competition for tesla as the electrical vehicle market heats up. the automaker could be losing its edge. and pot stocks flying high this year, one wall street firm is calling the cannabis craze nothing but smoke and mirrors. we will tell you what has them so bear itsh ♪ you should be mad they gave this guy a promotion.

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welcome back to "fast money. we have an earnings alert. let's get to contessa brewer at headquarters with more. >> mgm benefitted from the new properties they owned such as mgm springfield, the park and the know mad nomad in las vegas casinos have generally been hit and miss in ma coe because of the volatility there, the concerns over trade tensions with china, but mgm's new

property gave it a lift to meet fourth quarter expectations. dan waziola points out ma coe looks solid with the newer property seeing revenue of 275 million versus 172 million reported last year as the new vip rooms opened ftd that's notable because a lot of these casinos have focused on mass and premium mass. almost all the properties were better than our forecast, particularly in las vegas where, despite the tragic shooting in the prior year, company had been pointing out a strong convention business they kept expectations low and beat 'em mgm announced increasing quarterly dividends by 8%. the ceo reiterates his commitment to increasing free cash flow. although he's backed away from providing guidance, he's highlighting the growth vehicles of the future. one mgm 2020 it's an efficiency and cost cutting initiative and

partly an olive branch to activist including new board member keith meister and includes a look at these properties pursuit of a license to run an integrated resort in japan they've hired a new former nevada governor brian sandoval on that front, and sports betting in the united states they doubled down. they beat their competitors to the punch. the earnings call is still going on here. i'll jump back on. >> contessa, thank you guy what do you think? >> win, that's where i would go. i'm not the smartest guy here, wynn was a $200 stock, went down $100 late in the year in 201 that's cut in half, right? now it's 127 it has rallied significantly i still think there's room january macau -- the stock rallied on the back of it. to pk's point about bad news being not bad news for stocks which means i think there's room to the upside. >> the bad news was not as bad

as they expected out of macau. they were expecting it down -- >> ggr meaning gross gaining revenue. we love acronyms you love that valuation. this stock trades cheap relative to its peers the sense that china, forget the china trade dynamics which i think is a tailwind. the dynamic of big brother and concern about capital flight and a lot of these headwinds that were going on in macau are in many cases largely behind them i like the casinos as well. >> let's check on one of our other earnings moves, cisco is higher we'll bring you the very latest. i'm melissa lee, you're watching "fast money" on cnbc here's what else is coming up on fast. >> say, man, you got a joint >> no, not on me, man. >> it'd be a lot cooler if you did.

>> maybe not, one weed bear says the pot bubble is about it burst. >> plus, a top tesla analyst says the company's mote is shrinking. >> i'm not sure what you mean by that. >> don't worry elon, he'll be here to explain exactly what he means. there's much more "fast money" right after this

♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.

welcome back to "fast money. markets rallying despite signs the economy could be getting weaker auto loans delinquencies have hit the highest level since the financial crisis goldman sachs david solomon commenting on that in an exclusive interview earlier

today. >> well, there's no question that the momentum of growth in the united states has definitely slowed the trajectory is not quite as strong as it was a year ago. that said, economic activity in the united states is still chugging along pretty well i think we're in a position at the moment where we should see reasonable growth during the course of the year, let's say 2 to 2 1/4 fwroegrowth which is n bad. the chance of a recession in 2019 is quite small. >> david solomon said he's not worried. also look at this chart courtesy of our good friend tony dwyer, this shows despite the spike in auto delinquencies, other goirs are at their lowest levels of the cycle. what you need is to have all three levels go down in order for there to be a recession or credit crisis. no worries ahead according to

tony dwyer and d.j. sol. where do you fall? >> the economy will keep chugging ahead as long as people keep spending money, the economy will be chugging ahead 73% of our economy are people buying things at d.j. sol's holiday party or whatever he spins disks on the weekends. they're buying their drinks and their coffees. that's the u.s. economy. that can turn on a dime, and you saw hints of it in october and november people will stop spending if there's a market disruption, which is why the fed probably needed to do what they did but i am so -- no, i mean, u.s. consumer debt to gdp is now north of 50% a ridiculous level skprs, and corporate debt is approaching that also a ridiculous level. >> so you're worried despite d.j. sol, despite tony dwyer. >> i think it's right to be concerned about debt level, especially in a slowing economy. that's where you run into the problems we talked about what happened to the leverage loan market, we

should be continuing to watch the leverage loan market the high yield market back to where we were at the beginning of october when the thing fell out of bed i would argue that a lot of what happened year end was a liquidity dynamic. i think the biggest problem is not high yelled and it's not leverage loans it's essentially this triple b, triple b plus area. >> who said anything about a credit crisis. i know you thought that the late year selloff was liquidity, you just said that, but it also was a growth scare when you think about this, when we started 2018, expectations for gdp growth were north of 3 prerp. we' -- 3%, and 2019 north of that right now we're expected to grow at 2% in 2019 with the tailwind of the tax cut in the tenth year of this recovery. >> but you don't think that is a tailwind. >> hold on, though what is the average gdp growth in the last ten years since the financial crisis it's been about 2% when d.j. sol says i don't think

there's a great chance of a recession i'm not saying credit crisis that dramatically decreases when china could be a little south of 6% down from 6.6%. >> i mean, i hate to be the guy that's bullish again, but -- what this is like upside down world. >> this is a yellow light, this is a caution, canary in the coal mine, that type of thing you need to be concerned about you have to temper that with knowing we had tightening credit conditions here in the u.s we had a slowdown in the economy with the fed somewhat off the table, were things turning around maybe a trade deal in china, all these things add into perhaps looking through this keep an eye on it, but i don't think you have to panic. to dan's point about 2% gdp growth, that's great we had that. the market still went up we can argue about the economy i'm the first guy to tell you i think this whole thing ends very badly, but for right now stocks look like they still go up despite this indicator. >> when i was a kis in the 1950s, we used to play a game,

red light, green light, one two three. >> great game. >> that's all you had to add >> check out shares of cisco, they are moving higher in the after hours session after reporting earnings we'll tell you what is driving that move. plus a top tesla analyst sounding the alarm competition heats up he'll tell us what has him nervous when "fast money" returns.

♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.

welcome back to fast money tesla shares down as competition

starts to heat up. our phil lebeau joins us with more on that. >> with potential investments if electric vehicle maker rivian getting attention, it raises the question is tesla's dominance of the u.s. ev market potentially being threatened not anytime soon last year tesla easily outdistanced its kpets tcompeti when it comes to ev sales in the united states. keep in mind, those sales were helped up by deliveries of the model three. over the next couple of years, there will be more competition new electric vehicles on the way, especially from luxury automakers like porsche and jaguar that could cut into te a tesla's lead in the mass market, don't be surprised if you see tesla seeing greater competition, especially when it comes to crossover utility vehicles and pickup trucks. two areas where tesla has plans but those vehicles are not yet close to being sold. as a result, tesla's dominance, well, it looks like it has nothing to worry about right now. it could be threatened in the

next couple of years melissa, back it you. thanks phil lebeau for more on the next frontier for electric vehicles let's bring in adam. >> i want to get right to this report, i thought that was interesting from the gm perspective as well as from the tesla perspective. just the notion, gm a very profitable segment for them, the pickup truck, they want to make sure they have a toe hold in the electrified pickup truck is that really a threat for tesla which does not are a product currently on the market? >> so tesla has monopolized publicly traded electric vehicles since the ipo and they've pretty much all but monopolized market tesla accounts for 80% of unit volume, 90% of revenue, and they've done that without being in the hottest segments like pickup trucks and really a broader utility platform, so if someone can kind of cut them off at the pass and say, hey, we're going to put an electric power train and a duty cycle with

fleet buyers that can power tools and work with infrastructure on a job site, perhaps that's something that could be a differentiated edge that tesla acknowledges. they'll unveil an electric pickup truck this summer you know, maybe that's a way for someone to get in and try to cut tesla off. >> who do you think will win this fight i mean, obviously gm has the production expertise that tesla may not have they've had difficulties laun launching new products onto the markets, but tesla does have that cool factor, the design factor. >> we think it's going to be a clean sheet approach where you start from total ground zero on electric vehicle architecture, software done in-house and without having to defend a business model that may not have a long-term future, and so companies like rivian and other startups that can get access to the best talent and then can get access to capital and kind of

have the business model chops of an amazon behind it, that could pose to us we think a much more serious threat to tesla than, say, the germans who will have evs but the cultural issues are real limiting factors in our opinion. >> adam, i've always felt competition was the big issue. i would be more concerned if i'm a tesla shareholder about balance sheet issues at this point. i got very concerned looking at their capex essentially being down 60% year-over-year for a company that's a growth company. can you explain to me either why that might the case and also just where your greatest concerns lie in this company >> the biggest question for tesla's share price over the next 12 months more than just this emerging competition is this company finally at a point where it's self-financing? where it does need external capital to fund its ambitious plans. the last two quarters would tell you, yeah, almost a billion of free cash flow a quarter the referendum in the market is the difference between what has

been achieved and what can be sustained. elon guided to a pretty weak q1. we're expecting a 600 million cash burn. we think for the year they burned cash, no at ton, but reverse that trend so cutting the capex, yeah, we think there may be an air pocket from some demand that was pulled forward, and some of the ambitions we still think could use external funding we don't think they're quite out of the woods yet >> the stock has actually rallied. i know your price target is 283. is the next one the market doesn't look as favorably upon in your opinion? >> it depends where the money comes from we think that tesla is fundamentally overvalued but strategically undervalued. the mixture of those two things looef leaves a stock slightly above fair value at 283. we think the next capital raise, if it doesn't come from a stlooe strategic, be it a sovereign, a tech partner, another oem, if it

doesn't come from that genre, then it's not because they didn't try in our opinion. that can go a long way can they attach to a platform that can provide a greater resiliency longer term to their model instead of just being a stand alone electric car company. >> last question on gm going back to rivian, does that news make you incrementally more bullish on gm and the gm electrified vehicle story. >> let's saying confirming the news is confirmed, because the companies have not had a comment, assuming it's true, i think it would suggest that the board of trerkdirectors of gm, h is very sophisticated, we've written a lot about how important the culture has been to reawakening this company and being agile. it's great to see them do that at the same time it's kind of if you can't beat them join them moment for gm where they're funding a disrupter who's going after a segment where gm and

their detroit brethren, that's the holiest of holy. we think it accounts for 150% of ford's profits it's kind of touch and go and a net negative. >> analyst humor. >> it's a net negative for gm. >> it's a net negative but it's better than being in denial or spending the money yourself and saying we'll do it in-house and we'll dominate no one can touch our truck it's a bit of a self-awareness, but a net negative in our opinion. >> adam, thank you adam jonas of morgan stanley. >> a couple things about the q4 to q1 sequential move, that guide for q1 was substantially -- >> for tesla. >> was greater than it has been q4 to q1 i think it's close to 10% in terms of revenue what that does is set up very low expectations as we get towards the end of the quarter, and the other thing 280 on the downside, 380 on the upside. i think shorts covered down near 280. not the ones that are dig in

the stock has turned into a pretty good trading vehicle, no pun intended and the fact of the matter is they have lowered expectations where they haven't done so. >> tesla's effectively gone nowhere for the last year, so i tend to look at the company more like a venture capital type investment where you have a five or ten-year type time horizon where it's going to be this disruptive force not just in autos but perhaps in the electric grid. it's one of those for me you buy it, you take the shares, you put them in your drawer and in ten years see if you won. >> it's nice to hear adam who we respect talk about his respect for the gm board the story on gm and we learned about that news yesterday, does this give gm's multiple, which to me has been hard to talk about, or hard to explain. dan loves to talk about it how do you explain a company that continues to deliver numbers and be stuck in this multiple range, which is sub six right now, 2019. i think gm is obviously the better play between the two, not only on valuation, i think they're going to be in this

space. >> i thought it was interesting the initial reaction was positive on the part of gm shares, you know, just self-awareness that it's behind, that it's got to do something very quickly. >> it's got to do something quickly. the knee jerk was higher if you notice, adam has cuff links, he's got aj cuff links. >> how appropriate. >> we gave him that nickname. >> you're taking credit for that >> i would posit that he was born with those initials. >> why are you taking credit >> he's my favorite jonas brother, too. >> he's the bonus jonas. >> excellent. >> take a look at shares of cisco up 4% after reporting earnings we'll hear from the ceo in a few minutes. plus, are the curb shi games in cannabis too good to be te.ru why you should pass on the grass, more "fast money" still ahead. renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact

to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪

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temporary ivory, and help him get tickets to the mozart festival. excuse me, grant likes beethoven! uh, the beethoven festival. pure. love your insurance. welcome back to "fast money" shares of cisco jumping after beating on the earnings report let's get to josh lipton in san francisco with the details. >> a confident chuck robins on this call, the ceo saying the portfolio is in the best shape it's been in in years, that they've built a resilient growth

engine delivering revenue growth across all geographies and industries did ask about the government shutdown and tariffs, what impact those issues are having on his business. take a listen. >> it certainly is one of the more complex macro geopolitical environments that i think we've seen in quite a while with all the different moving parts, but to be honest from the first day of the quarter to the last day of the quarter, we saw zero difference we saw very steady demand throughout the quarter, and just saw great execution by our teams, and you know, when we look out ahead at the guide, you know, there's -- we're looking at the conditions as they exist today, and so far we've been able to navigate all the different die namynamics pretty. we're pretty proud of what the teams have accomplished. >> there was this interesting exchange where an analyst said he hosted this call with huawei, and they said they were going to gain share, market share, and robbins was having none of that. he said i put our innovation up

against theirs and anybody else in the world right now for much more tune in tomorrow, the ceo will be on cnbc talking about this report, and i'm sure his outlook. guys, back to you. >> thank you, josh lipton in san francisco. this was a very interesting quarter for cisco. it included the government shutdown, china trade tensions, it included a lot of the bad macro data from around the world. you said this is a very important earnings >> the confident, their ability to actually raise guidance revenue,s were expected to increase 3% sequentially they're saying it's going to be up 5%. given all those headwinds, 40% of their sales come from outside the u.s. to me this actually speaks to, you know, global enterprise spending here, and obviously the government stuff is really important, too i don't know if you buy the stock at 50 bucks trading at 18s 19 year highs. trading on a market multiple given that visibility and the confidence, it seems to be a good own in the high 40s >> sorry, i just think that cisco if it's treated in the

same way as with other tech infrastructure places people are wrong. they're in the position to be in cyber security there's a reason the stock's been so defensive, and i think this company's going to continue to go higher that is something that people can't stop spending on. >> they also seemed to buck the trend when it came to weakness in the data center we had juniper, they talked about weakness in the data center and here we are with cisco up 4% in the after hours. >> in the right businesses margins hanging inthere, they're buying stock to don's point trade's at 14 times next year's number you don't have huge growth i don't think you necessarily need huge growth now we're at levels that we topped out at midway last year, 49 1/2 or so, close above 50, levels we haven't seen since 1999, but i would rather wait to get that breakout identified and defin defined than buy here off this quarter. >> what's interesting is that chuck robbins was on cnbc a couple of weeks ago saying he

was very concerned about the global economy, very concerned how it's starting to impact his business this is excellent news that it snapped back, that the dploegloy snapped back i'm more in guy's camp the breakout 350 when it pulls out and bounces off 50 again. the smh, the etf up around 17%, the rally could get hotter when one big name reports tomorrow, nvidia dan, why don't you head over to the plasma. >> the implied movement is pretty big, and it's been an aggressive mover on earnings news over the last few months. if you think back to november 15th, the company reported very disappointing result the stock was down 20% then just last month january 25th, the company preannounced a negative quarter, and the stock was down 15% this stock has been cut in half from its early october highs tomorrow the options market is implying about a 10% move, excuse me 7% move in either

direction. that's 11 bucks. we talk about implied movement all the time let me break down exactly what that means if i know that this stock is reporting on thursday after the close, i can look at the at the money straddle, the weekly options. when the stock was trading at 155, the weekly 155 call was offered at 550 together that makes $11. between now and friday's expiration, if you were to buy the implied movement in this stock for earnings, you would need the stock to go up 11 or down 11 in either direction. that being said, if you're picking a direction and you want to be defined risk, you only need a 3.5% move or a $5.50 mover to get that right by friday's close there's that range right here. let's go to the charts on this one, the short dated call volume dominated today. the most active strikes with the february 150 and 155 strikes with the stock trading this is that 50% decline

there is that gap. here's the preannouncement gap when look at this thing, just like some of these other tech stocks have gotten mangled, facebook for one, apple for other, when the expectations get low and the news is out, act vision yesterday did the same sort of thing. when they finally get around to give the full report, the stock has room to the upside let's go to the five-year chart. one reason why you may consider if you have a directional view into earnings defining your risk with calls or puts, look at this thing. it obviously is down 50%, but i mean, i think you'd make the case that at some point this thing kind of overshot to the upside over the last few years defining your risk with an at the money call or put whether your directional bias is the way to do it you're risking $5.50 on something that may have a boomerang action if the news is unexpected. >> i know you just put a gummy bear in your mouth. >> i put it in, i take one bite, it's done. >> i was worried. >> a couple things come to mind.

at my age you start to associate events with certain things so for me nvidia two quarters ago i associate with that snowstorm, which the governor of new jersey screwed up which had us all in our car for six hours. now nvidia is a negative. >> can you explain that? i missed something. >> what did you miss >> i don't understand your analysis. >> nvidia the stock went down from 135 from 185. i was stuck in a car, snowstorm, six hours in the car i think nvidia goes lower. how's them apples? >> makes sense >> like you're really bitter. >> for more options action check out the full show friday, 5:30 p.m. eastern time. the cannabis craze has portfolios blazing this year you'll never guess what one wall street analyst is comparing this hel ins eryo. t 'ljo utoxplain we are live at the nasdaq in times square much more still ahead. what do you look for when you trade? i want free access to research. yep, td ameritrade's got that. free access to every platform.

yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪

welcome back to fast money the cannabis craze taking the word by storm as pot stocks blaze higher names like cronos almost doubling in value. one raymond james analyst says the pot trade reminds him of tulip mania and is warning it could go up in smoke david, great to have you with us. >> thank you very much for having me. >> i think it's worth noting that your background, correct me if i'm wrong, is covering the

pharmaceutical and biotech space so you're approaching it from concerns about the medical claims when it comes to medical marijuana and the various compounds in the cannabis plant when it comes to treating illnesses. is that correct? >> that's right. so i actually think it's important to preface this discussion with the fact that i don't view myself as a cannabis analyst. i view myself as a health care biotech analyst, and unfortunatelyin canada the major exchange here, the tsx has bafflingly decided to lump cannabis in with the broader health care index. i have a fiduciary responsibility to provide a fair objective unbiased opinion on the cannabis space, and i took the perspective to look at the space from the only lens i know how, and that's a scientific medical lens you know, providing an objective on biased opinion is something we at raymond james, you know, we pride ourselves on being able to deliver >> so basically you don't buy a

lot -- you say the research actually proved that a lot of the claims are effective there's one statistic that i want to quote you back from your note today medical cannabis is associated with a probability of clinical success for 1.3% for a niche market potential or ten times less than the 14% phase one commercial success rate of modern day biotech drug development. boil that down for me. it sounds like these claims are not going to make it, they're not going to be proven. >> well, i think that's right. so the approach that we took is first we started off with the sector as a whole. i'll be as clear as i possibly can. this is a bubble, just like the tulip mania, just like the commodities craze, railroad craze, even the crypto currency craze of last year, so look at the space, you know, lp's right now are trying to justify their

egregious valuations by making bold claims of medical efficacy and major medical indications, so we took a step back and we looked at about 10,000 preclinical and clinical studies that have been curated by the national academies of sciences engineering and medicine, and we wanted to determine whether or not any of these claims from glaucoma or glee owe minneapobla had any scientific -- that is chemotherapy induced nausea and vomiting, chronic pain, and improving muscle spasticity in multiple sclerosis to date if you look at all the clinical trials that have been completed there's about 160 of them only two drugs have been approved by the fda. that's a 1.4% probability of success. for a drug that you look at ep die lex did 1.4 million of sales in december. compare that to proper drug

development companies today, which have a probability of success of 14% from preclinical to commercialization to develop a drug that in itself could generate annual revenues in excess of the entire cannabis market, the risk/reward is far more favorable in biotech. >> we're out of time we'd love to have you back we only scratched the surface of your 60-page report. thanks for your time we do appreciate it. tim, i go to you, what if you took out medical use what if for some reason it was proven or not proven that it would be effective. >> good for him for asking some difficult questions about a sector that's very expensive, but to start to talk about tulips, first of all, i would argue that there's -- this is -- new frontier data does some great work in the space. they say it's 368 billion for the market with legal, medical, and recreational global. that's not a tulip market. that's a mass ive market but to get to the efficacy issues you can make an argument 15% of the

world's population are suffering from a condition that's commonly treated by cannabis. i mean, there's no question about it, and pain and otc and sleep, that's working. >> all right, up next, final trades it's time for the ultimate sleep number event on the

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>> i'm going to piggy back on that you can buy digital gold, black gold, oil, xop. >> nvidia. >> and for the triple in the energy space, holly frontier, that comes out hfc. >> see you back here tomorrow aw more with jim cramer starts right now. my mission is simple -- to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to make you some money. my job isn't just to entertain but to teach you call me at 1-800-743-cnbc. or tweet me @jimcramer everyone is always fretting about these trade negotiations with china or more forceful federal reserve or t