rallied aggressively since the start of this year, a couple of weeks ago. in the meantime, speaking of rallies, s&p, closing at a new all-time high today, first time in more than two years. >> and we've got a number of earnings next week, more regional banks, service now, intel at the end of the week. >> and we have pc at the end of the week. that does it for us at overtime. >> fast money starts now. live from the nasdaq market site in the heart of new york city's sometimes square, what's on top tonight. an all-time high for the s&p, record first time in over two years, the groups leading the way back to these levels, tech, communications services and industrials, but will the leaders keep leading? and can the red hot semitrade keep burning bright. believe the bounce, shares of spirit airlines recouping losses from this very turbulent week, but the bonds may be telling a much more troubling story about the company's viability. the chairwoman is digging into the debt details. and later, the return of your favorite fast money game, it's back, earnings season is

about to kick into high gear. should you trade or fade, next week's big reports, traders give their picks coming up. i'm melissa lee live from studio b object desk on the, bonn win eisen, courtney garcia, and guy adami. and a record two years in the making, s&p 500 up more than 1% today, locking all-time high, this has not happened since january 2022, the dow setting a new record, up nearly 400 pints to -- points today, 5% from its all-time high. the chip etf jumping 4%. notching best week since last may, the sector accounting for ten of the top eleven s&p stocks this week, how much further can this bull run go? it seems to defy gravity, defy expectations, guy? >> if you've listened to me, i apologize, number one, this desk has been cleksively bullish i have not. i'll say this, so much of today was predicated on a couple things, consumer sentiment, came

out much better than expected, on the back of interest rates going lower, which i think people view as a good thing, which i totally understand, be careful about that, number one, and number two, a huge option next, that karen can talk about at a as well, that probably fueled a lot of late day, a lot of entire day rally, with all that said, i mean, people are clearly pricing in the best case scenario, known to mankind, in terms of this stock market rally, and even the most ardent bulls, i think, have to be concerned when they see days like today. >> what about the options? >> we have a very specific options trader here, but this is over a trillion dollars, plus, right, the largest expiry we've ever seen, the s&p options expire in the morning, right, so for the rest of the day, i'm not really sure, you know, i've heard a lot of talk about gamma positioning, and how that leaves people having to buy, and maybe that continues, i don't know. i just -- it did seem very

melt-uppy, 4% today in semis. >> yeah. >> i don't know what happened today, so it's hard to say, oh, this is -- you know, it should be priced here. i'm long, this is my -- you know, but i don't know what to do here, and i'm looking at options, i've got to take some money off the table. although i do think, i do believe in the a.i. story, i do believe that there is several years of demand here, but this -- i mean, if we are back to where we were january 2022, remember what happened after january 2022? to the market? that was a very vicious, you know -- >> right. >> down cycle. so i can't explain it in a way that makes me think, oh, this is rational, and we should continue to think where this is going to continue. >> how much of this today was the technical aspect of the options expiration? >> i would allocate 50%. it's hard for me to say definitively, but the thing is, december and january are going to be like your largest index, and then the subsequent etf, if

you have all those options rolling off, you do either have to roll or replace them, or deal with the short gamma, which is what they've alluded to, it's going to lead to significant price action there. in terms of the semis, i do think there is something to be said about what they came on and said, talked about them a few weeks ago in terms of the china overhang but they're saying, listen, we're expecting the sector to grow by 10%, in our sales to grow by 20% in large part to gpu allocated, and a.i. driven type of growth. and i think that that is essentially an investors want to hear what they want to hear, if there's one narrative they want to hear, it is that, along with the rates story, the rates situation has been somewhat mixed, guy mentioned consumer sentiment, consumers continue to spend. i do agree that the very best goldilocks situation has been priced in. until we start to see some type of situation, even the banks allocating like the one-time fees, it's viewed through a positive lens, we're getting to a point where so many people are bullish, that the contra trend

needs to be taken into account. we mentioned that in december when people start today capitulate and buy and the opposite situation is taking hold. >> goldilocks seems like the base case scenario, the fed has got it right, the data indicate as strong economy, but we're slowing down enough, inflation is backing off enough for us to continue, and look at the markets runoff of this. >> which, if inflation does come down, and interest rates do come down, that is the perfect backdrop to make the markets go higher. but i do think markets did get ahead of themselves, with six cuts for next year, you're going to start to see a pullback, starting to see earlier this year, and now you're seeing again technology run up, which i really was of the mind-set, you're going to see this rotation happen, saw the end of last year and now the question is, is that happening? i think you are just starting to see some of that, we never got that euphoria in technology and i think you're starting to see that come in, people are excited about artificial intelligence so i think you're going so see some of that. ultimately things will shift back into that rotation moving forward. >> super microcomputer is the name we talked about, from time

to time on this desk, i don't want to pretend we're bullish, bearish, it's not a knock -- on december 11th, they downgraded that stock, put $140 price target on it, margin pressures, a number of different things. today it closed to 425 rks up 20 something percent today on the guide last night which by the way was very good. it goes to show you, how you can be so off sides in this entire space with all that said, you know, when you see a move of these magnitudes you have to say to yourself, there's something else going on right now, and this whole base case of soft landing, goldilocks scenario, all the things you hear every single day,fully flies in the face of do bank lending at an alarming rate, nobody is talking about and i'm of the belief that given the resteepening of the yield curve you'll see the effects of the 20-something months of an inverted yield curve. nobody wants to hear that but it's coming to a theater near you. >> that was nuts, as much as a

billion dollars higher in revenue for the quarter. how can we be so off sides on that, how did the company guide so low before and what changed, that's a separate question. >> the last time they reported that was november, right, it was a different world then, rates were peaking, right, and things felt very different. i don't know if that was a -- i mean, it's obviously, we can't help but think, it's very similar to nvidia like when that revenue guide was just extraordinary, off the charts. but, a lot of good things have been priced into the space, already. so i'm concerned. >> i mean, it's not the greatest set-up going into earnings season, to have the markets that record high, and semis in particular, with the intel next week on friday for sells to be at these levels. >> yeah, i tend to agree. so the situation is that we're getting very specific data that seems to lead the entire space higher, that's what we're all collectively saying here, i do agree, the bubbling of that, underneath the surface, is a bit

concerning. i think if intel or anyone else next week comes out and essentially says, listen, the slowdown is more than just perhaps hand held devices, we've already seen some caution in terms of like the electronic -- sorry, the electric vehicles, if there is anything that says, hey, actually, perhaps there is a hiccup in terms of this a.i.-led boom i do think, yes, that's the linchpin that's holding this whole thing together. i think that if there is any kind of pullback in that space, you might start to see some weakness, and nvidia, and amd, because those are the natural peer plays, i think the rest of the space takes a lot more pain. because that's the one area of strength. >> yeah, intel thursday, i misspoke. i said intel is out on thursday. in terms of earnings next week, court, what concerns you the most? we have a -- it's the first week, a smattering of earnings, we've got a wide range. >> yeah, it is, i think the bar is essentially very high right now, because if you look at the nasdaq 100, it's trading at 25 times earnings, which every time it gets to that level, it really hasn't been able to get much higher than that, i think the

argument is that artificial intelligence will boost revenue enough that it actually justifies higher earnings, i just don't know how much we're going to get there, that trade is already played out. fund manager already overallocated into technology. where did the additional money come from to push it higher, maybe it's the cash that's on the sidelines, close to $6 trillion that needs to make its way in, at the same time, that's safe -- people are terrified of putting money into the markets so is that going to come out and go into high-flying techs. i doubt it. what's going to bring it higher? it's got to be a higher bar. >> i agree with you 100%. netflix on tuesday, fascinating given that upgrade we just talked about. earlier this week, that's one to watch. but american express on friday, i only mention that because obviously it's the premier franchise out there in terms of what they do. one has to wonder. we understand, we talked about discover last night. completely different client. customer base is different. does american express see the things that dfs saw? that's interesting to me. and american express is within

six or seven dollars of its prior all-time high, made sometime in 2021. >> or even if they see the business part. >> the spend part. >> yeah. >> not much of a credit story, right. >> right, if they see spend levels. >> yes, the economy, and how also businesses want to spend. >> yeah, let's get more on the run in semis, bringing in bern stein's u.s. semianalyst stacy raskin, good to have you with us. >> good to be here. >> does this run make you nervous going into earnings season? >> anytime you go into earnings you prefer expectations to be lower rather than higher and expectations clearly are going up. some of it's also the general cyclical behavior, you have to remember, the cycle's been unusual. last year was a down trend, semis were down, stocks were great but revenues were down. this year revenues will grow, pcs and smart phones, driving semiconductor demand. they've hit bottom.

and people looking for markets to grow some this year. a.i. is clearly off the charts as you were talking about. i think there's some nervousness in some sense around the lagging and stuff, automotive and industrial, and those are end markets that probably are not going to do so well this year from revenue standpoint but for a lot of the companies they've already cut, and you get this sort of weird dynamic in semiconductors, when people tend to want to buy earnings bets, if they're confident that things have bottomed, that's a debate. that number has been cut enough, but in general, people have been buying these names on cyclical bottoming figures, so you're winning, in all ways, across semis as we go into earnings, and now you know the rubble hit the road, i guess, because we start out next week in some of these prints coming through, and we see where the chips land, i guess. >> stacy, watching all these, i know tuesday, texas instruments, you don't have to play stock market with me, but friday amd, and i'll tell you, talk about people getting off sides -- >> the following week. >> oh, apologies, the following

week, with that said, my point is the following, amd the last two quarters, the prior quarter, the stock was 134, so everybody seemingly loved it. it cratered. this last quarter, 97 it closed. knee jerk after earnings was to take it to 94. it's doubled since then. i mean -- >> it has. >> this is one of those names people can't figure out. how does it set up in earnings effectively an all-time high? >> yeah, so amd has been an interesting one. they've kind of missed numbers every quarter last year and it almost didn't matter because they were able to create this a.i. narrative, and then backing it up in some sense, right, they've got a road map with products on it. they've got some clear demand, and they set up expectations for the a.i. piece of it very smartly. they set the number -- i think they said they were going to do more than $2 billion in a.i. revenues, that number is small relative to the general scale of the industry, and so they probably left room to take it up. now, i do worry some what about

the rest of their business, like we've been seeing for several quarters, you know we'll see about pcs, i think they're sort of the general data center, like traditional data center market not so great. the embedded business is down double digits, gaming will be down 20%. it's entirely possible that the core business could still be weak but as long as people can have comfort in that a.i. story, maybe it still gets bought and that's what happened through last year. the issue with amd now is i think people are expecting that a.i. number to go up, and i know they said more than two, by the time we get to the end of this year, it better be a lot more than two, given where the stock is trading but that interesting dynamic, the tradeoff between the a.i. story and the traditional story, that's interesting how that plays out as they report and we go through the rest of the year. >> stacy, it's karen, thanks were being on. big picture question, you've been doing this a long time, you're good at it. what inning are we in in the

a.i. story as a business, and in terms of valuation of the players in the a.i. business? >> yeah, yeah. it actually depends on the player. right, so some of these -- amd is fairly expensive, and others like marvel and intel valuation has gone up on some of this. nvidia's stock price has gone up a lot. i've made that point on here before, the valuation for nvidia is not that bad because the earnings have gone up far faster than the stock prices have gone up and nvidia is one of the cheaper a.i. stocks if you can believe it. what inning are we in? there's the cyclical question and the structural question. long term, we're clearly very early in the a.i. transition, you know, chatgpt and generative a.i. has only been around for a year, give or take, and the general trend toward accelerated computing and the data center, very early on that. i think the cyclical one is still open for debate, and like part of the reason nvidia is trading where it is on a valuation standpoint, the numbers have gotten so big, so quickly, people just worry about

sustainability. and i think that's an open question for all of these guys, and i'm pretty convinced, if i'm looking at five years or ten years, we will be talking about numbers that are materially higher than we're talking about today. what does it look like in two years? i don't know, i don't think anybody knows, that's where the debate is. >> last quick question, stacy, in your coverage universe, which stock are you most nervous about in terms of the set-up relative to expectations? which do you think will be, which do you think we'll miss? >> in terms of expectations, look, clearly amd expectations have been rising and, again, i've been getting -- people have been throwing larger and larger numbers at me for a.i. clearly, that is something that they will have to deal with, and like the stock, especially in the last like week or two, it's just ripped, right, and you never really want to see that sort of thing, as you go into earnings, it makes me nervous. it does. i think with some of the analog stocks, it's going to be interesting because most of them have cut numbers very

materially, which is a good thing but the stocks themselves never went down. the multiples immediately went up in offsets and so some of those valuations are somewhat stretched and there's a question, i think, on whether or not some of these -- like the industrial and the auto numbers have been cut enough, we just have a negative pre-announcement from microchip, so those make me a little nervous. some of the ones i really like, i really like broadcom which has tried to derisk their core business, and they're saying they got a really good a.i. story that's bridging the gap and they just closed on the vm ware deal which adds a done of accretion into 2025. i like the broadcom story. >> stacy great to speak with you. courtney, where are you on chips? >> we owned, we want the exposure. i don't think it's going away. it's not where i'm actively allocating capital right now. i think the valuations have gotten too stretched. but absolutely, you need to have it as part of your portfolio,

long-term story here. >> glad stacy mentioned it. one name we've gotten right is broadcom and they look at it as $1,200 stock. but valuation-wise, it's reasonable, especially in the space, 21 times next year, with the growth rate that actually makes sense, he mentioned the vm ware deal, 100%. they're off cycle. the report late februaryish. coldman sax rised the price target and a lot of analysts will have to raise the price target in earnings. >> news alert on microsoft, a cyberbreach there, cnbc's megan kasella has more. microsoft is saying this evening a nation state actor affiliated with russia attacked its corporate system and gained access to a small percentage of microsoft corporate email accounts, including what the company says were members of the senior leadership team. the company detected the attack a week ago on january 12th, and it's saying tonight that they do not believe there are to be any material impact on the company

at this time. microsoft identified the attacker as midnight blizzard, a russian state-sponsored actor also known as novelium and it says the attack began in november 2023. the attackers were able to access email accounts in cybersecurity and legal departments as well as others. the attack appeared to be focused, at least initially, microsoft says, on information related to midnight blizzard itself. melissa, we'll keep tracking this, and back to you. >> all right, megan, thank you, in our d.c. bureau tonight. sort of a -- not sort of. it is a black eye for microsoft, considering the breach was specifically senior leadership and members of the cybersecurity department and, you know, impact or no impact on day-to-day operations, oftentimes with these breaches we do not know what was taken until months or even years later. so, i mean -- >> i'm surprised we found out, number one. but means probably something was going to leak. there are companies out there that have been hacked, you don't hear about because they want it

to go away. with that is all that said, you're right ant microsoft. how many years have we talked about siren security in palo alto. it's had ups and downs, but sitting here today, making it all-time high. the cybersecurity names still work, mel. >> agreed on cybersecurity. i think in terms of microsoft, i think this is especially concerning, considering the back and forth they had with openai. and essentially they're wanting to perhaps having that reined, this coupled with the breach in security at least would give one pause. i think you likely buy microsoft in the material pullback but i do think it's greater food for thought in terms of how we are transitioning into this a.i. environment. >> i agree with you. it's embarrassing. i mean, right? you'd think if anybody could get it right, well one, cybersecurity, but we've seen them breach as well. >> and email. >> and email, right, that should be -- i mean, the phishing expeditions are getting

sophisticated. my email box is littered with them. but still, i think that it's surprising to me that we're only hearing about this now. >> and it tookes months for them to figure it out. >> months to figure out. and what made january 12th, came to light, and we're seeing it a week later. to your point, we may never know. how broad that is. >> coming up, that's the spirit, spirit airlines catching some serious air today after raising guidance, but one of our traders says major turbulence is still on the table, not afraid to use the "b" word. the ceo of american express sounding off, two areas he says are at their best since before covid. more "fast money" in two. >> announcer: this is "fast money" with melissa lee, right here on cnbc.

i think he's having a midlife crisis i'm not. you got us t-mobile home internet lite. after a week of streaming they knocked us down... ...to dial up speeds. like from the 90s. great times. all i can do say is that my life is pre-- i like watching the puddles gather rain. -hey, your mom and i procreated to that song. oh, ew! i think you've said enough. why don't we just switch to xfinity like everyone else? then you would know what year it was. i know what year it is. >> we saw good spending, in holidays, thanksgiving to cybermonday, we just did release some credit statistics, through an 8k a few days ago, our delinquency rates, our write-off rates are lower than they were

in 2019, still. look, you had a good job, you had a good jobs report, wage increase in december. interest rates are leveling off, and inflation seems to be getting under control. >> that was american express ceo on the "halftime report" delivering the outlook on come r consumer, strong holiday spending and low delinquencies year end. finishing off 2% higher. others that fell, gaining steam, capital one, mastercard, visa, discover all closing in the green, but again we are talking about the bifurcated look of the consumer, the high-end doing well, the low-end not doing so well. >> exactly, yeah, and american express is showing what the high-end consumer is doing, which i don't think any of us question they're doing well and delinquency rates are good but broader industry is back to pre-pandemic levels if not lower. i am still optimistic on the consumer, you want to look at things like jp morgan showing

the consumer is still strong. we are seeing it broadly speaking, american express might not be the one to look at there. millennials and gen zs, higher consumers on the younger generation is doing very well, and american express is showing that, which i think is a really good sign. >> it's interesting how you can spin things, right, and he's -- amazing job, it's a fantastic company. so net charge-offs came in at 1.5%, streamers looking at 1.2%. last 12 months, it's been steady. i understand what he's saying, 30-day delinquencies, after six months of increases it's flattening out so you could say things are slowly improving, on the flipside, you could say, these are numbers that are somewhat alarming, 1.5% is not a big deal, but up from .7%, you know, it just -- again, it speaks to the state, i think, of the consumer on either end of the spectrum. >> so you're looking at the axp data and saying glass half empty

and he's looking at it, and glass half full. >> i'm prone to do that, totally. >> sure. >> and he can absolutely look at it that way because things have been flattening out, after increasing, increasing over six months he's seeing leveling off, glean something from that. i'm saying in this environment, if you think unemployment is going higher, which i do, based on a lot of different things, bank lending is being contracted, at a pretty alarming pace, at a certain point it's going to start to make its way into both sides of the spectrum. >> yeah, so you mentioned contracting lending, and we're also going to mention increasing credit card balances, i do think the glass half full, glass half empty analogy is quite fitting here, essentially you have dfs, you mention, from, you know, .7% to 1.2%, they guided about five, or 5.1%, there's a stark contrast there, now the question really is, do you think that that is contained within that bucket of consumer, if you will,

or do you think that that is the first step to that leaking into other areas, and it becoming a bit more of a contagion? clearly, if you're essentially funding your monthly transactions, with pay, that's the first tier, that's essentially your first loss cohort, the question here is, 1.2 would still be relatively low for the overall space, and so expecting a moderate tick-up even to a percent and a half is a meaningful increase, i think that's really where you want to drill down and look. not necessarily looking at the absolute values, 1 versus the other, but the overall trend. >> yeah, i think, though, that it was really important what he said about versus 19 # -- 2019 levels. >> right, right. >> if we take out all of the pandemic and all of the stimulus and all of that, forget all of that, look at history, that is relevant, it's still really good. so i understand what you're saying, it's a different demographic, but his demographic is very good. >> yeah. >> these are tiny moves.

i know they're big percentage moves, 13 to 15, that's a big percentage move but a tiny move. >> a lot more fast money to come. here's what's coming up next. >> announcer: spirited away, the airlines soaring on the back of strong guidance, but one of our traders says, the shadow of bankruptcy is still lurking. we'll dive into the debt markets for a look at why the future looks turbulent for this stock. plus, the energy sector in dire need of an energy drink, we'll kick it into high gear, and debate what this group needs to get back on track. you're watching "fast money" live from the nasdaq market site in times square. we're back right after this. we earn your trust. maintain our financial strength and stability.

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welcome back to fast money, spirit airlines catching a bid, soaring 17% after raising kbiends fourth quarter, 2023, now expecting revenues near the high end of previous estimates, spirit adding to its gains after hours, after the airline filed an appeal with jetblue to get the merger approved. what are the bonds saying? >> the bonds went up a lot today but the bonds are saying, these are 8%, that mature next year. september 20th, 2025, trading at 6280. that's telling you, there is really great concern about this being a non-bankrupt entity going forward. it's really sad to see, courtney and i were talking about it on the break, the idea that the justice department would say, no merger and then obviously the likelihood of them under increases, is that really good? >> preserving competition? >> although the counterargument might be that okay maybe they can restructure and come out as

a streamlined, less debt, better competitor, that's a possibility, although you never know what happens to the bankruptcy process, things can spin out of control. i would be very, very concerned here, i wouldn't -- i mean, i wouldn't -- i wouldn't touch those bonds. >> earlier today there's a report spirit was asking jetblue to appeal on the blockage of the merger, and we had a headline just, you know, in the past hour or so, that they will actually appeal the merger, we'll see if that yields any sort of results. >> yeah, although i wonder -- i don't know that -- i didn't look to see the contract so i don't know if they had an obligation to appeal, if jetblue had an obligation, maybe, but -- >> if you look at -- if we can pull long-term chart of spirit airlines up, i think the all-time high was made ten years ago in 2014, so clearly, this has been a fail -- and i'll use the word, a failing business for quite some time, the bounce now on the aftermarket, i guess it makes sense, given the amount of volume we've seen the last couple days, short to stock, you don't want to be short over the weekend, covering, there's a lot going on, but nothing that we've

just talked about changes the fundamental story of the company, in my opinion, and we'll see how it plays out next couple weeks. coming up, the energy sector in dire need of a boost, the sector is down 5% this year after a rough 2023, we'll explore what could get the group out of its funk, and time for america's favorite game, trade it or fade it. from telecom to travel and everything in between, you trade it, we fade it. fast money in two. >> miss add moment of fast, catch us anytime on the go. follow the fast money podcast, we're back right after this.

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welcome back to "fast money" record breaking day for stocks all three major indices tally gains for the week. closing at new records. the first time the s&p set an all-time high since january 2022 and the nasdaq jumping more than 1.5% now within 5% of its record and check out the names hitting record highs of their own, amd, mcdonald's, auto zone, uber and booking holdings, trading at best levels since going public. meantime, energy still stuck in a rut as it continues do

underperform in 2024, one of just three sectors to end last year in the red, and it's the worst performing sector so far in january. but is there anything that can give the space a boost? cnbc's pippa stevens joins us now to dig into the energy trade and you all thought, people thought it would be supply disruptions or the prospect of, and that hasn't been the case either, pippa. >> that's right, melissa, oil has been stuck in a range for months now and that gas closed out worst week in more than two years, investors aren't rushing into energy stocks, fund managers remain under weight with allocation hovering around the lowest in three years, according to bank of america, and with the lack of upside catalysts, energy etfs and mutual funds have seen 11 straight weeks of outflows but it could be a contrarian trade, across all sectors, analysts are the most bullish on energy. the average multiple was 11 times forward earnings, and using the pro screener tool, we looked for names that are cheap relative to peers as well as stocks that have more than 10% upside based on analyst price

targets and 5% below the 200-day moving average. apa, devon, and marathon oil making the list, alongside halliburton and chevron. the use of cash flow for debt reduction, stock buybacks and dividend hikes will bring investors back to the space. me lace is? >> why do you think the activity in the red sea is not impacting oil more? >> until we see supply disruption we're not going to see a response in prices, we saw that when russia first invaded ukraine, oil shot above 130, and there was a lot of feeling there we would see long scale disruptions, that has not happened and so i think this time around traders have potentially learned their lesson and they're not going to dive in until we see infrastructure hit, a closing of maybe the -- or some sort of supply coming offline. >> pippa, thanks pip at a pa

stevens. those are to be m&a activity. >> every announcement the stocks take a late lower. stock buyback, that top ticked the entire sector for a period of time and that's what's happening with this m&a, but courtney can talk about -- that was some very good quarter and if tim were here, it's a free cash flow story and guess what they delivered on that front. valuation has always been cheap but seemingly gets cheaper every quarter. i still like the space, it's been a tough own, though, for a who i will while. >> i like the space. i think it was f this was a good example. the bar for technology is really high, the bar nor energy has been really low, trades 11 times earnings, by far the cheapest sector out there right now, everyone is under weight in it. and slumber jay comes out, blew expectations, i think you're going to see a lot of that in the space this year and it is something you want to make sure you have as part of your portfolio. oil prices went down

significantly and i think that's what's getting lost in this conversation is oil prices may stay in this range, not a bad thing for the energy companies unless oil gets down to like $50 a barrel or lower, that's a lot of break evens, but at the range you're at now the companies will continue to be profitable. >> actually, energy was in most of your acronyms. you laugh. it was the e in vee scheme, it was the e in the helm. even though it should really be xle or something like that. >> yes. >> but you're -- that contrarian trade. >> for all the reasons you said, cash flow, discipline, balance sheets, all of that potential mergers, although anti-trust might be an issue there. they hate this space. at some point, though, there's this value will out. it will have to be that it will just be too cheap, i would have thought that already happened, and yet here we are lower. but i still -- i still like this unpopular trade. >> i don't think there's really much argument against valuation

story. i would caution that you could have made that same argument for health care last year, so just to compare apples to -- maybe i'm comparing two different fruits, i don't know, but my point is, that's at least a marker that you might want to point to. the other thing, i think what you're going to need to see a is a rotation out of technology and growth. overallocated and underallocated to energy, you're going to need to see that right side of normalize, those are the dollars that would flow out of technology, into energy, but again, i think that makes for a bearish overall setup. so you're going to need to see a flight from growth to what is going to be at least perceived as more stabilized, free cash flow earnings and valuation. >> coming up, get ready for the first trade it or fade it of 20246789 a new year, and a new way of playing, we are paddling into next week's earnings with america's favorite game. it's not pickleball. this year our traders are taking trade it or fade it into their own hands, the big updates next, shares in alphabet nearing

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earnings season kicks off full speed. netflix, tesla and intel all reporting. we wanted to shine the light on non-tech giants, we thought it would be a good time to play america's favorite game. yes, it is the return of trade it or fade it. first edition of the year, happy new year. first up, johnson & johnson, the health care stock reports next tuesday, it's been down over the past year, but on the recovery over the past few months, up almost 6%. karen, let's start with you. >> yes, okay. >> first of the year, i'm going to trade it. >> wow. >> there we go. okay. the reason being, i do like health care, it is part of my acronym, "h" for the xlb, which certainly makes sense. i think i like what they've done, i like the spin, that was good and that stock hasn't traded well, good for them for spinning it off. yesterday or two days ago we saw this mlr ratio at humana being very high and that bodes well for if you're in the medical device business, let's say, and

so i like the valuation, i like the space, i like the medical device part as well, so i am -- i would be long, and trading. >> bonawyn. >> i'm fading this one. karen makes good points. if i'm allocating good dollars, i want to be in the glp1 space, proven over the course of last year, that's what they'll pay for. the adjustable market can still grow there. if you look back to 2021, and 2022, it's essentially been in a down trend since it peaked in 2021. so i'm just not going to really fight the trend here and i'm going to allocate money elsewhere. >> we do a quick time-out. what's changed about this game is the use of the paddle. the signs we're holding up and lack of sound effects. and luckily bonawyn did his own so effects. throwing it out there, if you

wanted to add sound effects, in addition to the use of the paddle. that's encouraged. >> you're encouraging me to -- i can't believe you're saying that. okay, i'll play. >> not a complete game. >> play your reindeer game. >> set to report early next week, courtney, trade it or fade it. >> well, let's do the sound effect. ding ding ding, we're going with trade it here. verizon, had higher cash flow last year than they did the year before and expect to increase that again this year. but this is something that there has been some concern with them, their competition, but really they have the largest customer base, the broadest coverage in the country, they're going to continue to benefit from that, and they have a 6.7% dividend, it's an income value play, but look at it. >> guy? >> i mean, verizon, has bounced from 30 to 39, good for them, it happens, absolutely, it happens every once in a while, not going to last for long. t-mobile is where you want to be, not verizon or at&t.

proctor & gamble, flat today. guy, back to you, trade it or fade it. >> ding ding ding ding. trade it. did i do that right? >> gold star. >> listen, valuation is reasonable for them, 21 times next year's, look at their margins, i think 25% operating margins, it's one of those companies you want to fade, but you've got to trade. >> and bonawyn? >> big "x" here, big "x" here. listen, i think that staples essentially had their hay day, if you want to be in the consumer complex, and i would caution against it, if you're there, honestly, i think the upside is in abit more of the discretionary, more volatility, but that's probably where your upside is. >> united airlines, sinking 20% last year, karen, trade it or fade it. >> yes, boo-yah as someone on this network would say. i would trade it as well. for the reason it's been down a lot on news we've already seen. coming out with earnings next week, the bar has been lower bid

delta, it has been lowered by the boeing situation, so i think that the set-up -- the stocks has come in a very long way and their business is probably doing okay. we'll find out more next week, all that set up for me, i would trade it. >> courtney, trade it or fade it. >> wah-wah, no, this is the fade it. where are these sound effects. i like the airlines here but united is not where i want to be. they are going to have a little more exposure to boeing trouble that just recently happened, and they do have more business travel which tends to lag in an economic cycle so i think for some of those reasons i would look at delta over united. >> and meantime, today's record highs coincide with a big day for options expirations as we mentioned at the top of the show. mike khouw, joining us with insight into what he's seeing. mike, what did you observe today? >> well, it was a big day, it was actually the busiest day in options land, in about seven weeks, 58 million contracts traded or so and bonawyn was

saying the consensus the max 7 wasn't the place to be this year, but today they were really moving and so there were a lot of traders trying to chase the rally in the mag 7, actual it the mag 8 in this case, going over the list, amd, this one, we saw a lot of ck ativity in next week 170 calls, apple the 200s that expire next week, nvidia, the 600s, microsoft the 400s, and moving on to meta, alphabet, amazon and tesla, we saw the 385 calls in meta, the 150s in alphabet, and the 155s in amazon, along with the 230s in tesla. so people definitely looking to bet that they could at least buy some calls to insulate themselves, if they have actually been rotating into some other sectors, there was at least one big very low probability downside bet we saw a big put fly trading, 70,000 by 140,000 by 70,000 it was the 425, 410, 395, they laid out

just under 600,000 in premium but that trade would be worth about $100 million if the market did manage to fall 0% over the course of the next six weeks or so. low probability bet. >> how do you interpret these trades. >> >> big low probability bet but the short interest in the s&p and spy is actually at pretty cyclical lows, so that makes a bit of sense. the downside, i'm not sure if i would label that as an outright bearish view, it's likely a large institution-hedging sku, downside risk to customer but it's a legitimate flag nonetheless. >> mike, thanks. mike khouw. coming up, is alphabet in danger of all-time highs, one analyst throwing up a huge warning sign, the gamble you could be taking with gglooe. that's ahead. "fast money" is back in two. to be like wow! what did i do to get here?

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shares of alphabet climbing higher, hitting levels not seen since february 2022. one analyst thinks google's parent is the riskiest name in the tech game.

this was spelled out on squawk this morning. >> i'd love to see google come out and say we're taking a much harder look at costs. until they do that i've been waiting too long for them to do that. i'm going to be cautious with them on the cost side. >> before the fourth quarter earnings season he thinks alphabet is the riskiest in his coverage universe because of this. karen, what do you think? >> big position in alphabet. i think he's right. i would like to see them be more aggressive on costs. i do believe there's probably plenty they can do on costs. often, they're slow to come around, right, they were slow to -- i mean, having a report out there changed things a lot. going back several years, i think they can do it, i think they probably will do it. to me, though, the biggest risk of the alphabet story in the short term for the quarter is the cloud growth of the three, of aws, microsoft, and alphabet. they've been in -- they've been the slowest grower, and i would love to see that accelerate, that to me is the number one

thing. >> yeah, i mean the contrast, which he met in terms of year of efficiency and how much they've taken out and versus how slow alphabet has been, that's a real contrast. >> and carter braxton worth is not here, if he were, he would point out the fact that last chart speaks to it, the potential for a huge double top back to november of 2021. be on the lookout for that. up next, we've got your final trades. at morgan stanley, old school hard work meets bold new thinking.

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time for the final trade, let's go around the horn. bonn win eisen. >> the day-to-day volatility is tempting. i would save myself and avoid trying to trade. >> karen? >> yes, so one i've been looking at and i haven't pulled the trigger yet but i do it's s intrigues is charles schwab, the earnings announcement and people were upset, but as the day went on things got better. they may have bottomed. not super expensive going forward basis. so charles schwab. >> courtney. >> i take a look at the xle, it's an underloved space right now, value is attractive.

part of my acronym. take a look at this space. >> an acronym, it should be an "x" in your acronym. >> it ends with "e," you know. >> our fans come in all shapes and sizes, look at -- unbelievable, fast money fan, my mission is simple, to make you money. i am here to level the playing field for all investors. there is always a bull market somewhere and i promise to help you find it. "mad money" starts now. >> hey, i'm kramer. welcome to "mad money", welcome to kramer america. i'm just trying to make you a little money. my job is not just to entertain, but to entertain, and teach you. so, we have two wars in the middle east, another one going in ukraine