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tv   Fast Money  CNBC  October 13, 2020 5:00pm-6:00pm EDT

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>> two percentage points on global gdp. >> yeah. >> that's moving the needle quite a bit. maybe the market's confidence if we get something like that within several months if not right away has to be challenged in the short-term. >> we are out of time on "closing bell. thanks for watching. "fast money" starts right now. i'm melissa lee, and this is "fast money." a big bank breakdown what happened on the citi call that made one of our traders hit the sell button. apple pulling the wraps off its first-ever 5g yirks phones was this the ultimate sell the news event big story in biotech as a second company pauses its coronavirus treatment trial. we will bring you the latest on the developing story ahead we start off with big day with theic big banks, earnings season under way. citi and jp morgan topping
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expectations, both stocks falling. we mentioned somebody was listening in on the conference call and it caused that trader to hit the sell button we won't tell you which trader it was just yet. tim, it wasn't you what did you make of the conference call? >> i think you have a case here where clearly the numbers on the headline looked fantastic. but what was really causing that, that was about provisions, that was about credit quality. which, it's strange because we were complaining that we were fearful that the banks had bigger credit issues that were being possibly seen on the headline and therefore they were putting aside the major reserves what jp morgan -- look, that beat was a combination of some very strong investment banking and fic business but alsos the provisions that came down. that's something we should everyall be encouraged about with banks bus i think there is more where that came from. but there was some sense this was the only reason.
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net margins fell 14 basis points i think banks are going to ten to experience pressure when you look at that, glass empty going forward. >>. >> it was definitely the conference call. citi down 4% jp morgan down 1.5% or so. what struck me about the conference call is that analyst after analyst were trying to get citi to pinpoint the approximate cost of fixing the regulatory issues after question after question after question nobody got an answer and that seemed to be the problem. >> no. you know that was the problem, clearly. somebody -- i think one of the analysts -- i am paraphrasing. forgive me they said in terms of regulatory issues what's the difference between you -- are you this year's wells fargo, which is
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somewhat damning in terms of just the question. to your point, nobody seem to have an answer i think that's problematic in this environment we can talk about tangible book value and what i think about jp morgan i'm sure karen has some opinions there. i think karen made the point yesterday, the run-up in some of these banks, understanding it wasn't all that significant but you had a number of these banks run up specifically jp morgan from i think 92 to 102 maybe this was the reason sort of buy the rumor sell the news in terms of the selling off today. >> karen is back we were having technical issues. you are the trader who sold on the back of the conference call. what alarmed you. >> jp morgan had good provisions, capital markets, and the spread but it didn't inspire me trying the orchard park through the regulatory issues y they hadn't
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made progress on it since they knew about it for a while, how much it was going to cost, how long it would take to fix. given those extra expenses how were they going the get a higher r.o.e. what parts of their business were they going to be excited about? they really didn't have good answers to any of these questions. so i just think, a dollar book value at jp morgan is worth a lot more than a dollar of book value at citi. it trades that way it should trade that way it was inunfiring. funny thing -- from the fall, mike mayo, an outspoken analyst was begging the ceo to step aside now and get jane fraser get to work. really, they were not confidence inspiring and the stock deserved to be down. >> profitable lags its pierce. r.o.e. lags its pierce spending $1 billion to work through the regulatory issue but it doesn't have a handle, at least its not sharing its estimate how much it will cost
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in the future or how long. if you are a lover of bank -- if you appreciate the bank trade and want to be in a bank, is this the bank to be in at this point? >> no. i think you have to either be in goldman sachs or you go into investment managing and you going into a black rock. if you look at black rock price action today it was the only one that was green so i think the retail audience or the investing audience is probably leaning towards a black rock having said that, melissa, if you look at the ten-year yield then you everylay the xlf and all the financials they trade in lock step with yields. we had a hint of money coming out of growth going into value for the last two weeks now you are starting to see that sort of unwind the last two days because you had apple and amazon and technology suck up all the air in the room. but i think that financials
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truly need that value trade. they truly need rates to increase and that was starting to move the needle for them on a yield basis. these guys are covering it on a micro basis. i'm covering it on a macro this for me is value they are at the epicenter the value trade. but you do need the ten-year yield to start rise forth the banks to work again. would in the would you rather that you floated to me it is goldman sachs and black rock. >> i don't recall saying the words would you rather i don't remember that happening whatsoever but if you want to -- >> you never do. >> you go ahead and do that, do what you like. karen, i want to go back to you. what makes you hold on to half of that position still >> i guess -- i mean, it trades with like you are in the dog house valuation. that is somewhat compelling. i want the see what jane fraser
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can do but, you know, i have sort of a trading position and a holding position so the trading position, i sold. it almost wouldn't have mattered what price the stock traded at because i just found that call so uninspiring but, as a value girl, you know, i'm always interested in something that's really cheap. it is cheap. it deserves to be cheap. but i do think there is sort of a path higher. but it definitely warrants a smaller position, for sure, which it is now? guy, if not citi, then what bank >> i think citi is interesting i understand what karen is saying 100%. we mentioned for a while that citi, in terms of price to tangible book is trading at lfls we last saw probably in the financial crisis today they reported tangible book -- karen knows better than i but $62 give or take you are talking about a stock right now that's trading 62% of tangible book. >> i think 70 -- >> i didn't hear what you said
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but in comparison, jp morgan's tangible book went from i think 63 to $77 for reasons that karen also can explain but that's the math. so you are talking about jp morgan that's now trading 1.3 times tangible book. it deserves that valuation by the way, it probably deserves more of that valuation i can make an argument just based on that math it should be a $125 stock but i think citi is in the dog house n the penalty box for good reason but that valuation specifically to me, even with all the head winds, with all the thing we are going to hear about it remains somewhat compelling to me in citi tim, you are in citi, correct? this didn't prompt you to reevaluate your position whatsoever >> chateau bow wow i didn't hear it the same way karen heard it today i respect karen's call citibank, which has underperformed jp morgan so relative to another money
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center bank best of agreed by 20% since that june 5th high, by 20%. and i think the issues for citi bank really are get on with the restructuring. the reference to whatever went on in today's call but importantly, the fact this has proven to be a company that isn't controlling expenses like they used to that was disappointing today, too. the best thing citi had going for it were reserves that were loiter than expected i didn't hear anything new, there was nothing in those numbers that haven't already been i think punished in the stock. i was surprised the see the massive underperformance today each on a day when the headlines were good and they disappointed. not making a move today. closing eerks trade and eaton vance, the difference between the business model and that one being rewarded in the analyst community and the market is the
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recurring wretch stream and the predictability and the lower risk and lower val tilt in that easterning stream of morgan stanley. i think you are going to be surprised and i think that's a stock you can own into earnings into let's bring in girard did you find the citi call as alarming as karen did? i will put this question to you which was posted on the call is citi this year's wells fargo? >> i would say, no, it is not this year's wells fargo by any stretch of the imagination the problems that citi has of course are internal controls and procedure problems wells's problems were problems with their consumer customers, where those customers were hurt and damaged. so i'd kuwait it more to the -- you might really the jp morgan london whale problem of seven or eight years ago. that's i think a more similar comparison but it was disappointing they certainly were asked
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consistencally throughout the call about the expense number for working through these problems they don't have their arms around it just yet as part of the cease and desist order they have about 120 years where they have to put the plan in place they will have an estimate i think by then which means we will probably get a fourth quarter number it is going to take time it is going to be challenging on the cost side because revenues are under pressure as traders have been talking about, the interest rate environment put pressure on the debt interest margin for everyone which is going to affect wretches in 2021. >> seasons you are making a comparison to the london wail episode, when that happened did you as an analyst get a sense of how much that episode would cost jp morgan and what time frame? i am trying to understand if there is an appropriate valuation discount embedded in citi group shares right now given we don't know the extent of the expense and we don't know the time frame in which this issue will be resolved.
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>> no. that's a few question, in lista. i would say that i think the stock overreacted to the problems when this first kaem out a couple of week ago the stock traded down two days in a row. obviously it underperformed again today. don't get me wrong the problems are serious but they are fixable and the big difference is that, again, this is not something where customers were damaged or hurt and in the jp morgan case, the losses were bigger just because there were trading losses. but it was a control and procedure issue there as well. and it was fixed rather quickly because it was more trading than it is with this issue when they have to, again, control the back office it will take time. the cease and desist orders are very powerful. and we will get a number we have got to remember, too, that the company does have a lot of moment up in investment. >> abouting, jp morgan put up good numbers today and like the guy said we are probably going to see good numbers from energian stanley
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and goalman this week, too. >> karen you have a question. >> let me ask you something about the pressure on the net interest margin. a lot of that was due to an influx of dps. do you think they are going to be better able, citi or jp morgan to convert some of those deposits into anything higher yielding than the shortest end of the curve >> karen you put your thumb on it it issan an unbelievable problem to have. i can't believe i am saying this, but there is too many deposits the inflow into the banking system because of what the federal reserve has been doing has been extra other the balance sheet at the fed is now close to $7 trillion it was close to $4 trillion before the pandemic that money has to flow somewhere. it is flowing into the banking system unfortunately, the banks do not have the loan demands to support that kind of deposit growth and it has to go into short-term assets meaning sitting on the fence balance sheet and it is costing them money, believe it
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or not and hurting the net interest margin. we need to see the deposits outflow or put them to work. but the banks are a little reluctant to do that because they don't want to go out on the yield curve and take that interest rate risk so the pressure on the margin is not going to be alleviated i don't think any time soon. >> girard thank you for joining us great to hear from you girard cassidy of rbc. we haven't talk about what the banks said on the earnings call to the economy. usually jamie dimon is a good progress knost kator on that tim what was your takeaway well, he certainly made a very clear plea for more support for the economy in terms of fiscal stimulus jamie dimon i think has always had a very kind of rational and sober look at the economy and the world. and i think that that sent part of a message people know that banks ultimately are the ultimate
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barometer trade for the economy. we talked on this show all the time, at least over the last two or three months, maybe six months, where the disconnect between the banking sector and the rest of the market either said there was something wrong in the assessment of the economy or frankly how healthy main street was and banks should be trading better maybe on some level oday's temperature test by jimmy diamond and to the extent either implicitly by citi bank was not all that bullish on the economy. banks have played that story for the last six months? all right. we want to take a check on shares of bed, bath, and beyond. they are spiking in after-hours session. eric chemi has the details. >> the shares up 6% in the last few minutes after the close. putting out an 8k saying it with off non-core assets raising a quarter of a billion dollars that would include the christmas
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tree shops division. also linen holdings to an institutional buyer and a districts center in florence, new jersey three non-core assets that bet bath and beyond is selling an 8k just put out that's why the stock is up 6%? we already know that bet, bath, and beyond has been on a campaign to reduce its footprint by closing stars karen, what are your thoughts on this one >> it is very leifered anything they can do to take down the leif vaj good they have been doing a great job and as you said, closing the store base is going to ends up being good for them. there is a real big short interest here. it is pricing in a good recovery, which they deserve, they deserve that credit because they are doing a good job. but i am not in it. coming up, apple feeling the need for speed we are going to take you through the event today where the company unveiled its first-ever 5g iphones we will break down how our trarders are trading this news. first a developing story in the biotech world as a second
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tech company pauses it is virus trials the latest when "fast money" returns. ♪ you can go your own way
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♪ go your own way your wireless. your rules. only xfinity mobile lets you choose shared data, unlimited or a mix of each. and switch anytime so you only pay for the data you need. switch and save up to $400 a year on your wireless bill. with the carrier rated #1 in customer satisfaction. call, click, or visit your local xfinity store today. welcome back to "fast money. we are following a developing story in the biotech world as el
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el becomes the second major drug company to pause it is coronavirus trial within just the past 24 hours. let's get to megger theel with the details. meg? >> melissa, well, lilly of course is koefling antibody drugs to treat covid-19. we learned of that temporary pause on enrollment in one of its antibody trials from a doctor who tweeted about it today essentially saying it had been paused due to potential safety concerns in the trial we don't have much more information. here's what we do know this is an nih-sponsored study testing the antibody drug on top of standardized care for hospitalized cases, which is remdesivir little lee telling us there was a pause of enrollment in terms of safety for participants in the trial. we do know their other antibody trials are continuing. only pausing this one trial. you also mentioned johnson &
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johnson. last night they announced a pause in their covid-19 vaccine trials due to an unexplained illness. it is under review from a data safety monitoring board. at this point we don't know even if this participant received a vaccine or a placebo we did talk with the ceo this morning about how it might affect timelines here's what he told us. >> even with the pause, we are still planning for success we are looking at first quarter of next year as the time line that we have put out there we are continuing to invest as if success will occur. so we are continuing to expand our manufacturing footprint to ensure that in the event we do receive approval that we are ready to go and manufacture and distribute vaccines to as many people as might need them. >> now, melissa, of course these headlines sound very scary but what experts are telling us is this is actual three system working as it should be. these are very large trials, and they are under a ton of
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scrutiny we usually just don't hear about these kinds of things. what it shows is that these independent data monitoring boards are watching the trials closely, pausing them if something looks off, investigating. and if they look okay, allowing them to start again. at this point, we just don't know what the events were. >> meg, just to be clear, this trial specifically was the antibody drug in concert with remdesivir; is that correct? the antibody drug alone, last week was it, that el eli lilly filed an eua for that? >> yes, eli lilly and regeneron filed for emergency use authorization for their antibody drugs. the data that eli lilly has is for a different setting, for patients who are not in the hospital they were not receiving the antibody on top of remdesivir. we don't know if that led to these issues but that is a difference in the two settings. >> and we don't know if the
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person who got sick was on the placebo on received the treatment; is that correct >> that's correct. we content know that information in eli lilly trial or in johnson & johnson's trial at this point. >> where do we go here >> i am glad you asked that question and glad meg gave you that answer. clinical trials are going on all the time and they are stopped for whatever reason and we never hear about it because for obvious reasons maybe we are not all that interested in it. this is hyper focused. i can understand but with that said, lilly traded awful since the beginning of july look at it quickly, on october 27th they record the 148 level, in february, the stock made a high at 148. then fell off the cliff and traded at 122. past resistance becomes support. a company 18.5 times lastier's earnings
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and you probably have 11% eps growth i think you buy eli lilly. >> regeneron traded higher again today presumably because regeneron lass a similar antibody drug. it was used by the president in conjunction with reasonable des veer didn't have any apparent side effects there. where do you in this space was this a buying opportunitily? >> guy brings up an interesting point. july levels of these stocks. all of these stocks, a, eli lilly, johnson & johnson, regeneron are all trading below their july highs when you look through the weeds a little bit with j&j, take out the covid. that clouded the view of everybody. everyone has become myopic on covid. when you look at multipell my loma, when you look at it they beat revenue there they raised financial guidance for a second time. i think i would go in a johnson
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& johnson all things being equal. you have to be very careful. the vaccineine trade is running out of momentum. if you are looking for these names, the market would show you they are tripping over themselves to buy them they are not anymore since july they are making a series of lower highs. i would not be in most of them if all you are hanging your hat on is just the vaccine i would go with a johnson & johnson where you have multiple reasons and multiple levers they are pull. >> for more, head to our website, cnbc.com. hears what's coming up next. >> a new iphone, a new home pod, a new network. oh, my we'll bring you all the headlines from apple's most consequential product larchl yet. and amazon's sixth annual prime day in high gear will the shopping holiday deliver the ingas investors are hoping for we have got that and a lot more when "fast money" returns.
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offers investors a broader view. ♪ we see companies protecting the bottom line by putting people first. we see a bright future, still hungry for the ingenuity of those ready for the next challenge. today, we are translating decades of experience into strategies for the road ahead. we are morgan stanley.
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welcome back to "fast money. ammel making a big beton speed unveiling its first lineup of 5g phones today josh >> ceo tim cook took the stage virtually of course and introduced the new iphone 12 it comes in four versions all 5g enabled in different sizes starting at $699 for the iphone 12 mini which has a 5.4 inch display, to the iphone 12 pro max which has a 6.4 inch display and costs $1099. >> every decade there is a new generation of technology that
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provides a step change in what we can do with our iphones the next generation is here. today is the beginning of a new era for iphone >> some analysts think initial dmonds for these phones could be softer then expected because 5g coverage is spotty here in the u.s. their bet is that the shift to 5g is real and apple will ultimately benefit but consumer adoption they think the more of a 2021 event apple stock finished lower though excitement about 5g propelled it up higher this year it is up $130 from the march low. wasn't just new iphones. apple released a smaller less expensive version of its smart speaker. it costs $99 competing with amazon and google in this market.
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>> how do you think about apple's run-up so far this year, the valuation of apple given what josh is saying is true, that it is a 2021 even simply because even if i were into 5g and wanted speed my carrier doesn't have a full 5g offering so why am i going to buy the new phone now? >> two pieces are at play. what is going to power the iphone franchise the next year that is this legacy base they have add 9 million iphone owners who have three-year-old phones or older. a tail win coming into the next year that's positive. that's going to get them to the step up in growth. the street is looking for 15% revenue growth from flattish this year. that's a tail wind it has nothing to do with 5g i agree with your comment. josh's comment also. that some of the comments today from verizon specifically i think overstate where 5g is at i think as consumers start to get ahold of the devices they
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will understand the speed simply isn't there. that is not an indictment about the 5g opportunity longer term this is massive. for apple it is going to be a three year upgrade cycle think of it this way 2021 is the year of the old eye phones, and then' 22,' 23,' 24 three year upgrade cycle around 5g i am optimistic but i think there is a layer of caution in terms of what consumers should except about the 5g experience in the next year. >> why should we expect after three years consumers will still upgrade their iphones if they still work, we are in a pandemic, they are uncertain about their economic prospects f they are going to have employed in year. i have got a 7 and it still works okay this is definitely pour than three years old. >> it works okay, but are you thinking about that upgrade? i suspect that thought has crossed your mind. ultimately, the answer to your
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question, how is this going to continue the prosell, the iphone business has been flat last quarter. despite the pandemic it has been flattish the mac and the ipad business are 22% of revenue, they are up 30% massive step up from flattish before. they are seeing the benefit from work and educate from home but the iphone has been at more of a level base. i think ultimately it is straightforward is that we depend on these devices and no one in the world makes a better device than apple. i try to keep a steady middle of the road approach to all of this but i think that that is a statement in fact. this is the best phone in these times i think that the iphone is going to benefit from that i was crit account about 5g and the carriers
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that's in carriecarrier's cost we are talking about a $700 starting price it is a different dynamic. i think apple is in position to be patient and capitalize on the represent the over the next few years. >> speaking of the carriers. how about a driver coming from verizon who stepped forward who talked about financing and trade in options is this going to bring a larger replacement cycle to people that might have been on the fence, but carriers are back in play. they are doing it again. this was a big part of two or three cycles ago. >> they are back at i. they are going to be a part of it but it is not an incremental update or tail wind to it. the carriers get behind the phones they want to be part of it i don't view that as neither a negative nor a positive. it is the carriers in this case simply put are neutral i believe there is a subtle detail about apple's event today
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that gets missed if i may quickly talk about home pod mini it is less than 1% of revenue. they now have a $100 version versus the previous perfecting at $300. that's going to capture the headlines. i think what gets missed in the headlines -- this gets back to the question of where apple goes in the next fewist years, the ability of that device to integrate with your iphone, ipad, car play and other devices -- there is no limit to it i ask the question bradley, why is it that apple trades at an in-line level with its brethren. why is it on the trading at a premium? this is the only company that brings these devices together. i think it is going to move the stock up in the next few years and it is going to be a reasonable multiple. >> i want to ask you about the amazon and i have one more question about the super cycle
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if you think it is still going to be four or five years, not so much the three years is that still a super cycle? >> it is i don't know the right way to express it super cycle is usually just a boom and a bust. so i don't have a good way to kind of express that but i would say typically it i a one-year cycle and sometimes they are a big one year cycle. think about the iphone 6 for example. but there is boom and bust i thinker with going into a slow rising tide over the next four years. different drivers each year. i think this is the best way to invest in 5g is you this an apple. >> i want to hit on amazon prime day started today it is a two-day vent i was on the site -- i mean i am always looking for a deal. what i noticed about primeday is that a lot of the deals were the amazon in-house brand products i am wondering what your take on prime day was today? into that's a -- two topics going on what is prime day all about? now it is about building brand
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more broadly just the amazon brand. i used to be about gaining prime members. when they started five years ago there were 70 million, now there is 150 prime members you have to be a prime member to participate in prime day then there is this idea of what you pick up. this is what's going on in the regulatory environment with amazon how much should they be promoting their own products how much do they compete with the sellers on their platform. i have not been shopping on primeday i will unchutedly look but my simple take on it is amazon should be careful and tread softly because this is a hot button and they don't want to poke the bear. >> precisely the issue outlined in the house report. gene mumster, thank you. you pick, guy, apple or amazon what do you want to trade? >> choose your own adventure
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>> choose your adventure. >> this is not a would you rather but i will turn it into one since steve was able to do that earlier i would rather amazon here apple reports on the 29th. ends of then mo obviously they fired the split bullet last quarter. it was a weird quarter for them. you wonder how much was pulled forward. makes sense that it stopped here amazon i think continues to run into earnings. i said that last night given the parameters that you just said, i would rather amazon right here. >> all right coming up, a way to get in on the tech trade with under the radar plays. and later, how oio aptnsre playing united health into tomorrow's report. "fast money" back after this grandparents! we want to put money aside for them, so...change in plans. alright, let's see what we can adjust. ♪
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welcome back to "fast money. etf power house inves khouw launching a new way to get in on the tech trade bob pisani has the details. >> hello melissa, good the see you. success begets success invesco's nkds 100 etf, the qqq has become a money center the etf space. todayer expanding on the
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original idea. they are launching an etf which is essentially the 101 to 200 big tech innovators. the symbol is qqqj get it? j for junior it includes mid cap sec nolgs like seagate, z scaler, it also has gar minute and lyft and zinca. these aren't necessarily pure tech companies but they are companies using technology in interesting ways who could blame invesco for trying to capitalize on the success of the nasdaq 100 and the qqq? this all started in 1999 it was one of the original etfs. it is now the lead etf company in the united states you can't blame them for starting a second version ever it this isn't the first time we have seen a junior varsity
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version of an etfn. 2009, van he can was successful with the gold miner's etf, that was so successful they launched the junior gold miner's etf. great volume today 870,000 shares in the next gen etf. $25 million. not bad. for a first day. >> pretty good trading >> when you think about the gdxj, you think it has more data to it than a gdx if you wanted to have more volatility, more upside to the space you would go with gdxj is that the same thinking for the qqqj >> i don't think they consciously reasonablebly did it that way, but if i had to guess i would say over time the junior would have more volatility these send to be smaller
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companies, some of them are more up-and-coming. the beta i think tends to be a little bit higher. i don't think that was intentional but i think you are probably right, that will be one of the effects of it is this by the way, they also launched three others, correct, bob, variations of the qs >> yes one is a lower priced version of the qqqs. it is true of a of the how of the etfs, like thesider spy, they try to keep a higher price on it because they make a lot of money. but there is pressure from competitors so they launch a lower priced version that's essentially the same thing they say the old one has liar liquidity, the lower one is for long term investors and the basis points are lower here. it is the same fund but they have tricks out will. >> bob pisani thank you. he is the host of etf edge, why
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he is the expert in there. steve grasso, how would you think of the qqqj in your portfolio? >> i think this is a sign of the times. i think the retail trader and the professional trader like to use these etfs i think what bob i think inned, z scaler is up 237% year to date zinca is up 55% year to date you are going to get more eyeballs on a gar mini i think the retail or the robin hood traders are going to get in there and look under the hood. i think basically, the analogy to the miners, it all sort of comes out in the wash. you would think beta on the junt they are actual low both up the same amount year to date i think this one will be different, you have those large cam companies that really take
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all the attention and are the elephants in the room. but when you look at a z scaler i think people will going to start to pay attention to the innards of these names and they will ends up trading this as much as they would the regular qs if you are a junior type trader. >> this is also happening at a firm that is in an industry which is under pressure in terms of assets under management. >> right that's sort of an interesting part to me that invesco, eaton vance, we saw else innon pelts taking a stake in invesco and i think janice henderson on the jp morgan call today they seemed very open to the idea of acquiring some sort of asset manager if they could find the right one. that's interesting to me from that side as opposed to i am not sure what the junior -- i don't know what to make of it. but the asset management consolidation that i believe is coming is interesting. coming up, delta hitting new
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head winds today what the company said about the future that could create more turbulence in this trade. later counting down earnings if united health dastock hitting record highs toy. options traders betting on healthier gains when it reports. we will break down the action when "fast money" returns. ♪ ♪ ♪ ♪
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welcome back to "fast money. shares of delta airlines dropping today after the company reported a q 3 loss of more than $5 billion phil lebeau just sat down with delta's ceo and is in chicago with the latest. >> whenever we do these earnings reports especially over the last couple of quarters the fact they had an you willy third quarter was not news everybody knew they were going to be experiencing a mossive loss that comes with revenue dropping 79%. the real focus, the cash burn. look where delta was in the third quarter versus where they went in september. this they went from $24 million a day being burned for all of q 3 down to $18 million in september. the goal in the fourth quarter get somewhere between 10 and $12 million, maybe down to $10 million by the end of the year and perhaps break even by sometime next spring when we talked to ed bastion
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earlier today he said the key is eliminating the routes where you are not making money and cut costs as much as possible and get back to break even. >> our capacity in the fourth quarter is down 40%. we are already eliminated a significant amount of the loss making routes. it is going to take some time before -- interest the spring, early part of next year before we start to see profits as well as cash flow positive results. but the reality is is that this is going the take some time. think about it if we can get to that point in 12 months' time it is pretty remarkable. >> it is all about liquidity and debt in terms of liquidity delta ended the third quarter with $21.6 billion. the adjusted net debt is about $17 billion. they have already paid down since the end of the third quarter, melissa, they have paid down about $5 billion in dent. a revolver and there was another debt payment in there.
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one other airline note look at shares of united why are we showing you this? tomorrow at this time we will be talking about united's q 3 results along with talking to the ceo of united on thursday morning. this is the beginning of airline earnings season -- shall i say financial season because there were no earnings for the third quarter. it was interesting listening to delta pushing the break even point back out to spring they originally were targeted the end of the year stho they targeted the end of the year in the second quarter, right, fill, in the second quarter report. >> correct yes? okay. >> remember, when they all got the c.a.r.e.s. act back in march they said our hope is we can all get to break each by the end of the year let's be honest it was so early in the pandemic nobody was sure how bad things were going to get. >> phil lebeau thanks. nobody was sure but the stock did go up on that forecast i am wondering, do you believe them and ed bastion's forecast
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things slide all over the place. it is difficult to predict when people are going to want to fly again. >> you should rely on that which they can control which is their cash burn and their balance sheet and liquidity at this point. i think that's the part this -- whether, you know, they pushed back free cash flow a quarter. early spring versus year en. will they be there in early spring i am not sure the market is clear. the day we had with eli lilly and j&j yesterday in the sense that science takes a long time and that there is a lot of dynamics here moving with the pandemic i don't think anybody excepts airlines to move along quickly. delta is the best balanced of the carriers yesterday's move was to sell them. much more on the airlines in a cnbc special do not miss shepard smith reports, air travel in turmoil that airs tomorrow night, 8:00 p.m. eastern time here on cnbc. still ahead, united health
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about to kick off a key round of health care concernings. how options traders are setting up for the report. at the top of the hour, jim cramer sitting down with the tns infiesdrk company celsius. that's tonight 6:p.m. eastern. don't go anywhere. for "fast money" strayed ahet. -- straight ahead i started out as a cashier. i mean, the sky's the limit with walmart. it's all up to you. ♪ ♪ as business moves forward, we're all changing the way things get done. like how we redefine collaboration... how we come up with new ways to serve our customers... and deliver our products. but no matter how things change, one thing never will...
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you can rely on the people and the network of at&t... to help keep your business connected.
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welcome back to "fast money. united health hitting a record high ahead of tomorrow's earning reports. >> calls and puts are evenly distributed but i would note that the option volume was twice what we typically see on a day look at the at the money straddles options are applying a 3% move out to friday. that's a 4% average move coming out of earnings. i want to point out to me what looked to be a slick trid on a non-script day looking at the unh december 300 put, 1,000 of those were sold at about 780. you are collecting two and a half percent of your people sum, 60% of the 4% earnings move. your average is broke b down to
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88 per spot. >> "options action" at 5:30 eastern. up next, final trade ♪ >> "options action" at 5:30 eastern. up next, final trade 88 per spot. >> "options action" at 5:30 eastern. up next, final trade ♪
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>> karen >> big stimulus or small, i like walmart. >> steve >> oen, probably going to double from here. still long. >> guy. >> blackstone. >> thanks for my mission is simple, is to make you money i promise help you find it "mad money" starts now hey, i am cramer welcome to "mad money. just trying to make you some money. my job is not just to entertain you. call me, tweet me @jimcramer today with the dow at 15

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