that hasn't been enough but maybe it will be this time around if they give good guidance, they say we're not fearing the interest rate outlook, maybe they can catch a bit. >> i think the other thing that's key is whether the powell rally extends into next week. >> of course. >> beyond the tone from the banks because that was the name of the game. >> citigroup kicks off on monday we are out of time today thanks for watching "closing bell." >> have a great weekend. "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's time square i'm melissa lee. tim seymour, guy adami and pete najarian the fcc has approved a $5 million fine for the facebook giant. plus johnson & johnson not out of the woods yet, the doj launching a criminal probe into what the company knew about the cancer risk in the baby powder first we start off with judgment day for the markets. stocks soared to all-time highs as earnings get ready to kick

into full gear next week with the banks ready to report but names like netflix, microsoft, ibm, all on deck will earnings season spark another leg of the rally or could it derail this market? guy adami. >> i mean here i'm going to say it is going to derail it because i have been obviously bearish. i think the markets are all over incorrectly for quite sometime, but for the life of me i can't believe earnings -- you will be able to build momentum from what we have seen on the back of earnings, which at best will be tepid. we have seen the preannouncement. maybe i'm wrong, made guidance will be good maybe we will get some surprises, but in my world earnings can only disappoint given we're at all-time highs in the s&p. >> can it hurt though? >> i don't know. >> i don't think it could hurt. >> really? >> yeah, because don't we all know what is going to happen they're going to kitchen sink it, right? >> i don't think kitchen sink is out there. >> well, they're going to blame it on trade, they're going to blame it on anything that you could imagine. i think the earnings, the estimates have ratcheted in or the consensus have come in enough -- >> they came in for second

quarter but not for third quarter, back half of the year. >> second half of the year, 2h, which for some people started to be a place where there had been building some momentum look, i think for the banks, i actually don't think the banks -- of all of the different sectors reporting, the banks obviously are the headline, but also i think the banks are the least likely to talk about pressures on their business relative to the others in other words banks have a core consumer lending business. they have a net interest market, they have a capital market interest if you think about what is going on wall street, you have volatility, a great ipo calendar i think the thick business might be okay. when we look for reasons to be buying on earnings, i think banks typically -- remember, we usually get -- we have outperformed on citi, outperformed on j.p. morgan and those have been reasons to buy in first couple of days. >> we had a couple of banks that warned on second quarter so it is in the market right now i will mention one thing j.p. morgan, we had a chartist talking about the potential for a breakout 120 is a massive level for this

thing. i believe if it were to meaningfully break out on earnings better than expected, it may take a lot of the banks with it. i want to make one point if you go back to january 2018 when we had the all-time high, the ramp into q4 reporting season of 2017, what happened in february we flushed after that. then we got back we made a new high in october. you know what that was that was q3 reporting season what did we do we flushed last october, for a new high this past april, what did we have in may? we had a horrible may. it came right after q1 earnings season here we are, up 10%. we make new highs everyday and now people are discounting everything and complacent. i'm saying -- >> but it is about the fed we learned this week it is about the fed, but to tim's point about net interest margins that accounts for 50% of these bulge bracket banks' revenue i think you will make it up. you have ipo that were strong and you have mortgages, mortgages that are strong. other than that, it is not a lot. >> banks are good, but some would argue the banks don't

necessarily set the tone for a lot of the earnings season you want to hear what they say about the economy, global tensions and all of that stuff, but in terms of how everything else trades after banks, it is debaseab debatable. >> that's my point i want to hear what jamie diamond says about the economy i think they have their finger on the pulse to the point, look, you are at a place where you have relative strength indicators on the dow jones that you are over 80 this is the highest it has been in terms of momentum for the overall market, leapt alot alon into the earnings season since the famed january 2018 blow-off top. i think we are at a place where the market's moving into place is as important as the expectations people have. >> can i give you an interesting name on monday right off the bat? >> right off the bat. >> you're doing it sorry. >> not before the bell, but -- >> after the bell? >> we never bring up this.

maybe you do it on "oa" from time to time which i will be on in about half an hour. >> i can't wait. >> jb hunt. >> i knew it! i was looking at the list before you said it. >> jb hunt after the close there was $130 stock last july it had a miserable year. >> as most of the truckers have. >> exactly you wonder what they say because, listen, it is a bellwether stock for -- i believe for the broader economy. you can say fedex is fedex specific maybe it is true, but if hunt comes out and says some lousy things, it makes you wonder where -- >> but now -- >> what have you been sleeping the last few weeks we havedo dow transports, we ha ups. >> the freighters. >> yes. >> we got it done. go back to sleep. >> i gave you a specific name though, dan. >> yes. >> we think that the economy is slowing, right we heard that from j powell, right? we heard that the economy is slowing, so i'm not really sure what in the earnings is going to shock us

that's why i said i don't think it could hurt at this point. i think it can only help because that's why he's cutting rates. so if the economy is getting worse, that only bolsters the rate cut >> on why he is doing what he is doing, i think the fed has lost a tremendous amount of credibility. i know guy is going to say this fed also, you know, throw it on the heap, but the reasons why he is saying he is cutting rates are not the reasons why, you know -- we just don't get it he got bullied into it. >> he said the reasons months ago. >> look at the data we saw this week in general. >> i don't think there's a surprise about where the economy is and the macros, everybody knows that go to a name like fedex up over 3.5% today, transports up 2.5% today, that tells you that people are reassessing a little bit about their positioning on these names. i'm not telling you that anything will be that great. i don't think you can. >> you know what fedex got the cramer bump. i think jim did a thing on it on

"mad money" last night sometimes it is nice for someone to say, hey, listen, this is the valuation of this thing, this is the opportunity. yes, the headlines have been bad competitively, you know, global growth wise, all of that sort of stuff, but it is a cheap stock run by very good management and, you know, it is better risk s risk/reward. >> it is only up 4% to date. >> i guess one thing that's really important is they're trying to be cautiously optimistic mel, when you say what are we going to hear from management over the next couple of weeks, they have to justify there's no mulligans with the stock market at all-time highs, they have to justify where they are and tell a good story and look out more than a quarter and see what it looks like six months from here. >> you see ceos blaming trade when they're at a loss, they're blaming trade. i don't think it will be different. >> i think there will be nuances in the earnings season when the earnings report came out they blamed the china tariffs. they said they were able to pass

on part of the cost increases to pass on the tariffs but they're seeing inflation in raw materials themselves that price increase can't offset all of the rise that they're seeing because of tariffs plus actual inflation so if there is actual inflation, it is going to educate us on how we think about the economy. >> and it is going -- and how we think about companies and how we think about their margins for the second half. >> yes. >> if you think about the cpi number out yesterday, you were up .4 a percent. here we are first time saying we haven't seen a sign of inflation from tariffs and you had it in cpi. i think companies need to start talking about it. >> it is interesting we started this morning at 6:00 a.m. >> 6:00 a.m., bright and early. >> all over the map. >> all over the map. >> bro. >> don't bro me, bro it is interesting, hard hitting interview with pete najarian he said a lot of interesting things, but the china/u.s. talks, called it a quiet period. >> yes. >> is that code for we ain't talking? i mean in my world --

>> or we have nothing going on. >> we have nothing going on. >> in your house, guy, what is a quiet period >> time out. >> sleeping on the couch in mine. >> my point is i don't think we are closer to a deal than six months ago i think we might be further. if you are banking on a rally accelerating by this deal i don't think it is coming. >> yes the dollar will be a big issue we heard it from fedex, from nike and a few companies that t reported so far, pepsi. >> the dollar had an interesting week because as soon as the fed affirmed some things, but then you had the turn around in rates and yields and you had the sense people were looking at it as a stronger dollar environment, 1.12 against the euro. frankly, the dollar has been a nonevent if you hear a company telling you the dollar has impacted the last three or six months, it is hard to see that because fx neutral should be dollar flat over six months. >> which company are you looking at next week

>> we will talk netflix on "oa." i think the banks are really important. i know you made the point, mel, they don't always set the same tone for the rest of the economy, but remember here, they are the life blood of the economy. if you do believe that things are slowing and that the economy in the second half is going to have a worse time than it had in the first half, you really want to hear what they had to say i go back to regional banks that carry that index. >> worst chart you have ever seen >> possibly one of the worst charts when you think the s&p 500 makes new highs every day and you look at jp morgan, best of breed, looking to finally break out of the prior double top and the kre can't get going, that's why i think the money center banks and how they react to earnings will be important next week coming up, netflix one of the big names reporting next week as mentioned, stock is up 40% this year. one trader thinks new highs are ahead. plus, sinking 2% today as the doj announces a criminal probe into johnson & johnson later, i will take you inside the $70 billion black market for cannabis live from times square in new

york city, much refa ne rht after this. ne rht after this. ♪ we run right into these crises, and we do not leave until normalcy is restor it was a mom and her kids. everything they had had been washed away. the only thing that brought any kind of solace was the ability to hand her a device so she could call her family and let them know that she was okay. (vo) there for you when it matters most. join us and get up to $650 when you switch. that's verizon.

welcome back to "fast money" reports saying the federal trade

commission has slapped facebook with a $5 billion settlement over the company cambridge analytica scandal in 2015, the largest fine imposed by them on a tech company, it looks like the company dodged a heftier fine is the worst over for facebook >> some might say it is a $5 billion slap on the wrist. it was at the high end of all expectations it was not a number that was early on part of, you know, kind of the whisper numbers so we have talked about facebook needing to basically appeal to washington and throw themselves accountable. the bigger issue for me is really how can facebook begin to measure the cost to their overall business from security and from programming and, you know, so far it has been proven to be less about sentiment towards the company. i think this has to be seen as a victory. >> well, no, i mean maybe. but like june 3rd, remember when facebook was trading 180 and in two trading days it went to 16 because doj and fcc was going to divide up the maga caps and see

what they would investigate. that's what was reported at the time and that stock went flush down. >> but it is a settlement. >> there's no reason to believe the settlement has to do -- >> it was a different thing. >> this is for the misuse of data that, you know, goes back years. so to me i think it is really hard to take a 401 headline for the "wall street journal" and paint it with a broad brush that this is it. >> definitely spiked up based on, quote, unquote, closure, but it did spike to overbought status on relative strength indicator. it is already up 56% and now it has another target on its back with crypto. i think they've got a lot of stuff behind them and they have a new target in front of them. so i would say sell on the strength. >> at the very least, the fcc is off their back for now. >> yes, and, you know -- well, i shouldn't say that, but they're probably laughing all the way to -- they're saying, kristin wilensky, one of our crack producers, says, isn't it just the cost of doing business she is in my ear and she is right, it is the cost of doing business you had the president coming

down on these guys, mark cuban coming down on these guys, had this headline, stock closes up almost 2%. i do not want to like facebook, i still think it is going to test the high we saw last july of 224. >> the head of libra is going to the hill next week. >> i think the libra thing is really important because when you think about it, this started coming back from the 165 level once the libra stuff started trickling out over the last month and a half or so and you have to ask yourself what is in it for that. you know, that is something that's not going to be in their earnings or anything for a very, very long time so as you get to july 24th and these guys report q2 and give guidance, i mean how much of this move -- 25% or 30% since early june has to do with libra? i don't think you want to own it for that right now. >> i'm melissa lee, you are watching "fast money", first in business worldwide in the meantime, here is what else is coming up? >> i just love television so much. >> we all do. >> yes, that's true. and a record number of people are binging on netflix we will tell you what it means for the stock as the streaming giant gets ready to report

earnings plus, weed killers we'll take you inside the $70 billion black market thas t' crippling the legal cannabis business our special report is next there's much more "fast money" there's much more "fast money" after thisge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

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let's expect more from technology. let's put smart to work. ♪ ♪ welcome back to "fast money" a big buzz kill today for johnson & johnson, falling 4% after the justice department revealed it was pursuing a criminal investigation into the company for possibly lying about the cancer risk associated with its talcum powder. the stock dragging down the rest of the health care space today, where trump pulled a key proposal eliminating rebate for drugs. health care is still the worst performing sector, but could things get worse for the group,

dan? >> it is funny we were talking about facebook and fcc settlement and it is hard to know when things are out of the way i think johnson & johnson a good example. in december when the stock was at an all-time high and flush which news of this started happening, it kept a lid on the stock. it is a $350 million cap company. stocks have single stock risk. we are complacent thinking about the s&p going to all-time high, but you had lilly at a level, i think 110. it was 105 on the opening. some of the groups without a lot of support right now underperforming in the market, i think there's risk to them >> when johnson & johnson had that flush, again, it was one of those surprises that the market wasn't expecting this was a period when actually markets didn't need another stalwart and certainly a back stop stock to fall out of bed. i think this about johnson & johnson, relative to its peer and relative to the multiple they get on their pharma business effectively, i think it trades quite chief and they have more growth than their peers

when you look at the diversification of the conglomerate, there's other places for them to mitigate this ultimately i think you have an opportunity here you don't have it today. it is clear that there's still, you know, a lot of regulatory risk, but this company is, again, one of the best of three. and i don't think you run terribly far. >> very few things are bipartisan today in congress and in d.c bipartisan is the hate for health care and anything about it so you enter the segment with it is has underperformed, where do you go biotech has under performed, the rebate chase, all have under performed. i believe you stay away from it. >> july 16th, which i believe is monday or is it tuesday? that's within johnson & johnson reports. dan is looking at his chart because i -- i was very good at looking over my partner's shoulder in high school to get answers. that 148 level dan is looking at was the high in january of 2018, december of 2019, major double tops

they report. this stock probably has that 124 level which bottomed out in june of this year right in the crosshairs >> all right well, going from buzz kill to getting a little buzz, the booming pot industry has taken investors in the country by storm, but unlicensed cannabis dispensaries are a growing threat to legal sells. cnbc investigated how the black market dispensaries are crippling the industry ♪ it is a weekday afternoon in los angeles, the epicenter of cannabis in the united states. this busy dispensary is open for business. >> hi. >> but if everything looks normal, it isn't this is, in fact, an unlicensed, illegal dispensary, part of the booming black market in california and around the country. it is what the cannabis industry says could be the biggest threat to sky high expected revenues. case in point, california.

early projections of more than $1 billion in annual cannabis tax receipts in 2018 are far from the $$345 million collected. that's in large part because the illegal market can easily undercut the cost of running licensed dispensaries. it is not hard to see how. >> you guys ready? >> yes. >> yes. >> all right >> okay, go. >> a team of cnbc producers equipped with hidden cameras visited ten illegal dispensaries throughout l.a. most aren't hard to find and they're open day -- and night. this is exactly why legal store owners like cameron wald, executive vice president of project cannabis, is outraged at how bold the black market has become. >> we're facing, especially in california and in l.a. specifically, an illicit market that is extremely strong we are outnumbered three-to-one, illicit operator to legal operator so, you know, we have outrageous comprise compression that we have to see at our stores.

>> how much easier do you think it is to operate as an illegal dispensary compared to what you go through >> it is a lot easier. they have no compliance standard they had no permitting process, no documentation, no legal process that they had to go through. >> they're breaking the law, potentially threatening the health of consumers and threatening your business? >> correct. >> and they're doing this in plain sight? >> in plain sight. >> we should note our producers did not buy anything from the illegal dispensaries, which didn't respond to our repeated question for comment there are 186 licensed dispensaries in l.a. with more than 250 illegal ones according to authorities, but no one knows the exact number for more on the story you can head on over to cnbc.com at the heart of this, tim, is the assumption that when there are also of these forecasts being made that there's a belief that these black market dollars will be converted into legal dollars. if that capture isn't 100%, the forecasts may be off. >> yes look, so the total market, both legal and illicit globally is

about 450 billion, but get back to the united states and get back to section 280e, which is essentially a tax code issue with the irs, which means that legal dispensaries are not able to deduct standard, you know, cost of sales and goods sold they can't make money. they can't be profitable, and they've been put in such a bad position if you think about the dynamics between also -- look, it is the best of both worlds for the illicit trade. think of the perception trade, the possession laws that have actually gotten -- no one really cares about cannabis anymore in other words it is not illegal. it is not illegal to have it, it is not illegal to smoke it suddenly these forces really have a broader market and yet they don't have the cost so this is one of the big issues the taxation itself is one of the things that's driving prices higher and driving the consumer to illicit so it is coming from both sides and it is -- you know, for the legal business that wants regulation and actually wants to deliver and is delivering a safer product, this is a big deal. >> in california, there are three taxes dispensaries must

pay, a cannabis tax, excise tax and sales tax, all of that plus licensing and testing fees that allows the illegal dispensaries to charge about 40% less than legal dispensaries the question is do you know what you are getting, because the city attorney launched an investigation, they tested products and they found in one case at least a pesticide used on golf courses to make the grass greener on this weed so we don't know what you're getting. >> so already it sounds like they are cracking down. >> they're trying. >> it sounds like ultimately they will get to the end case and we will know what the real market is. >> it is $1,000 fine though. $1,000 is the maximum penalty. >> ask scott for $1,000 right now. final trade time, tim. >> at the risk of talking about an ancillary industry let's go to domino's who reports next week and i think continues to have growth on the international market you want the see right now. >> steve. >> ge, been forming a base i will go back to that well once again. ge, final trade. >> dan. >> netflix, stick around we will talk about how to play

it in "oa. >> steve. >> i can't wait for "oa. i didn't know it was going to be on "oa" until later today. carter is probably watching. i hope carter feels better. >> hi, carter. >> if rates are ing gohigher, earnings on the 31st. >> that does it for us don't move "options action" is up right after this we call it the mother standard of care. it's how we care for our patients- like job. his team at ctca treated his cancer and side effects. so job can stay strong for his family. cancer treatment centers of america. appointments available now.

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hi there we're live at the nasdaq market site on this summer friday the guys getting ready behind me you know hey, look, guy there sticking around for the big show in the meantime, here is what is coming up. ♪ a record numb of people just watched "stranger things." >> it is a good thing, right >> dan nathan thinks so and he will tell you how to get in on the drama. plus -- ♪ up from the ground come a bubbling crude ♪ >> oil and energy stocks are surging and mike khouwhi