You why Something Else may be the key to oils next move. But first, we start with the markets. It was, of course, a tough day for stocks, i guess. The dow down 150 points at its lows. Although both the dow and s p eked out gains for the month of may. And the losses come as expectations mount for a Federal ReserveInterest Rate rise as the dollar enters a twomonth high. What do you do with your portfolio now . I dont see anything wrong with going for the protection, especially at the levels coming into today. We finished last week at 2100. But you look at the way the dow traded today. It really was something that was reflective of a couple of things. Boeing, bing turn to the down side. The energy names, chevron, exxon, you see the way oil flipped from over 50 to close underneath 49. Big flip there. Is that something thats sustainable . The way weve been trading lately on oil, it seems like the ranges seem to have a higher lows and higher highs. Youve got to be impressed with the way the financials have held up. As a matter of fact, the move over the last couple of weeks along with apple and all those suppliers, thats where people are going. Financials, technology, thats been the lift over the last couple of weeks to get us where we are now. Is an Interest Rate rise factored in to where we are now . I feel like there is. There is not a spokesman who hasnt been in front of the media recently telling us about whats going on, how this looks, and what theyre leaning towards. They certainly sound to me like theyre leaning towards a hike in june. Whether they do or not is a different story. The only issue is we saw the fed futures are the increase june 15th. 24 . Heres the one problem that i see right now. You see this dollar is holding pat here. The dollar is acting like they are going to raise in a couple of weeks. If you look at fed fund futures, its not. I think you have a little bit of a conundrum. We have breaking news on alibaba. Good evening, simon. Yeah, we wanted to fill people in on a story that is just breaking now. Started breaking in japan 20 minutes ago. Soft bank, 32 of alibaba shares are owned by softmank. It started back in 2000. Soft bank is going to be selling roughly 7. 9 billion worth of its alibaba stake. Taking it down from a 32 level to about 28 when these various transactions are done. Let me quickly tell you about the transactions. The key one is the issuance of whats going to be a 5 billion mandatory Exchangeable Trust security that will be exchangeable when it in three years. Its a threeyear term. When it turns out in three years, youll get alibaba shares. It will have the effect effectively of having softbank go to the upside in three years, but not actually suffer any of the down side. Not clear exactly what other terms are associated with that convertible security, including the premium and or coupon it will include as well. Essentially taking down its debt by paying back debt, raising cash in order to do so, and taking down its 3. 8 right now to 3. 3 . In addition to the 5 billion convertible, softbank will also be selling 2 billion worth of alibaba shares back to the company. Then something called the alibaba partnership. The top 28 executives at the company. They will be buying 400 million worth of softbanks ownership stake of alibaba. And finally, there is a Sovereign Fund that has not been named that will buy half a billion dollars of shares. All adding up to a sale of 7. 9 billion worth of alibaba shares. But just to give you a sense as to how large that position is at softbank. Only taking its owner position down to roughly 28 . But a significant transaction nonetheless that certainly we wanted to get to people with. Particularly because of the interesting security that is the heart of it. Okay, david, thank you very much. David faber with the breaking news on alibaba. Karen, what should people make of whats going on here . I would think wed see pressure on alibaba. I was wondering if yahoo has any ability to do any of those kind of swaps as well or whether its just softbanks opportunity or not. Its an interesting set of transactions. Sounds like. Structured well for softbank, sounds like. So i dont know. I would think pressure on alibaba. After an afterhours trade were down only 2 . People are certainly not frightened by the move, or feeling that the skids are being put under the stop. I also point out, i just looked at it, i didnt look at alibaba all day. But i see it traded four times normal volume today. So im not sure quite what that means. I dont know if people were chinas shares were active earlier. I will say to karens point, the headline risk in this stock to me is still towards the down side. Its trading well given what you just talked about. Id let the shakeout before i get back into it. It seems all these investigations are coming back. You go over a year ago and look at this stock and start to look at all of the fraudulent things sold on that. Now all of a sudden it gives softbank an opportunity to get themselves into a position where theyre taking off some of that leverage they had on in there. Its still at 28 . Importantly, its still there. But i think for softbank, this sounds like a great trade. It makes yahoo look like a bunch of chumps. How are they going to monetize it. It makes them look like a bunch of amateurs when you think about it. To me you have softbank which has been a stalwart for 20 years. You have yahoo that have this one thing that bailed them out. And they couldnt figure out how to monetize it. I would expect pressure on yahoo here as we still try to figure out who is buying that core and what is left. Or monetize it in a taxfree way. Lets step back to the market discussions. Stops clearly having arguably a tough day as the fed hike rate fears continue. Im sure people disagree with me, i think you have to stay long bonds. I still believe in the gold trade. I understand its linked to the dollar, but i do think although gold has sold off over the last two weeks, theres something going on in gold miners and commodities. So i say stay long bonds, stay long gold. Why do you think that about gold . To me, something changed to me it all changed when japanese went to the negative Interest Rate policy. A lot of Central Banks hoarding in the market. It sold off on dollar strength. But to me theres something going on. You would think fed tightening, that you would see the gold trade unwind. I agree with that. But you think it links that fed tightening, dollar strength. I dont think of gold as a commodity anymore. To me its now a play against currencies. Interesting. Or perhaps the belief that the fed put itself behind the curve and is arguably attempting to make up room there. Thats a much longer conversation there. But i think theyre going to move. I agree probably for a different reason. I think theyre going to move because they have to give themselves some runway at the back end of the year if something drastic happened i dont think theyll do it this summer. Why would they whether a Voting Member or not, why are they in front of us, telling us every day thats the thing. Just tell me. They dont. To me, i think im just saying, why is the fed in front of us every sing whether its bullard or whomever telling us, look, the economy looks great. That was a quote from just the other day. Everybodys gaming the system in some way to tell es they want to raise the rates. I tell you, i think the best possible scenario is to remain hawkish in their stance. Talk the way they need to talk. And if the market doesnt crater, then you have a situation where maybe theyre ready to do it. I dont think theyll do it in june. And i think it will be unlikely in july. And you get to the election. You may have the second rate increase in ten years happen in december. The second one that happens. To me, i just dont think that you have to trade it right here. If you look at how fed fund futures have been whipping around. At the last month they were at 6 . 34 late last week. Now at 24 . I suspect well see what in july . July is about 54 . In june or july, maybe brex is the issue. June 23, well know. Then well know. So june, july, i think that the bonds are sort of telling you. I dont think the bonds are saying no. Look at the move from the bottom. Are the bondsman ip late by the huge wave of the liquidity of the system . Maybe not the think about the world that we live in right now. And when you look at the potential for this rate cycle increase to me, when you look at 9 trillion of sovereign debt that is in negative Interest Rates, look at everything thats going it just doesnt make any sense theyll go in a cycle here. Lets stick with the markets. Bank of america, Merrill Lynch has a stern warning for investors. It believes the s p could drop by up to 15 this summer. So whats behind that warning. Head of u. S. Equity strategy, bank of america has kindly joined us here at the Nasdaq Market site to explain. Good evening. Good evening. This is a very bearish call from you guys. I felt pretty good about the markets since 2011. This is the first year its felt not so good. First of all, we have the fed embarking on a tightening cycle amid a profits recession. Normally the fed does not hike into bad growth. They hike into good growth to slow everything down. This time around we have the fed hiking into at least two quarters of negative year over year profit growth. So we look back over time. We found that this has happened three other times in the past. Just three times. And two out of three of those times you saw the market sell off in the next 12 months. Here we are, sitting at the same level that the s p was in december of last year when the fed hiked rates. I just feel this is not a great setup for risk assets. Just clarify one thing, though. Sure. All that said, you still only think theres one rate rise from the feds, and thats in september. Well, okay, heres the thing. Economists believe the rate hike will happen in september. But they do think theres a real possibility that we do get a summer rate hike. Which is another reason that im worried about stocks. Because i dont think the market is pricing in a summer rate hike. The reason is, if you look at the stocks in the sectors in the s p that are expensive, there are industries that benefit from zero Interest Rates. These are utilities, staples. Theyre still trading at some of the highest multiples weve ever seen. Whats cheap today are financials, technology companies, Cash Rich Companies that would actually benefit from a tightening psych. We asked this question before you came on. I asked you specifically, do you think a rate hike is in the market . Im just looking at the way the financials are trading. Look at the last couple of weeks, since the governor types got out there and everybodys jawboning about this idea of a rate hike. Look at the way the financials have look at the low pe type companies. A lot of the tech companies, apple and so forth, and look at the chips, all moving to the upside. I think a lot of that based on people starting to expect in their rotation into certain markets. They moved a little bit. But if you look at their valuations, theyre still discounting a fairly benign rate environment. One hike this year, another one next year, nothing to write home about. I think what would roil the market is the fed would do what theyre jawboning right now. A couple of rate hikes this year i dont think are priced into the market. Thats not the only reason were bearish on stocks, though. Ill tell you a couple of other reasons. The fed tightening is a profits recession. The credit market is telling us something. Granted, credit spreads retrace pretty significantly in the last couple of months. But if you look at one of the indicators we like to track, the distress ratio, thats telling us that something is wrong in credit. That capital is harder to get. The fed is tightening. Senior Loan Officers data shows its grown tighter rather than easier. Corporations getting capital is becoming more and more challenging in this environment. Whats your year end target . I think were amongst the lowest on the street. What area of the market is the best . I think you want to stay quality. You want to stay large cap. But i dont necessarily think you want to hug these low dat ta sectors like staples and utilities. Which i think are super expensive, priced for perfection that happen to be some of 9 most levered sectors in the s p 500. What i do like are cashrich companies. Here i see a lot of examples in tech, in health care, health care is really taking it on the chin this year, from the election risk, for being a crowded area of the market. So tech and health care would be the areas we see the most relative value opportunities. Great to see you. Thanks. Great to be here. From bank of america Merrill Lynch. Stocks are rich. Dan will say theyre richer on a nine gap. Lets put it this way, if you give an s p 120, thats rich in my opinion in this environment. I do think the fed moves in june. I think thats bad. I think if they dochblt move, its worse. They find themselves in a corner. I think were in a similar situation that we were last time. There was a lot of urn certainty about what the course of tightening would be. A lot of uncertainty outside the united states. I actually believe its not going to be one or two rate hikes that trips up the broad market here. It will be external like we saw last summer. Piece are pricing a small probability of that. Look why the yuan is, its going lower here. So relative to what the pdoc is also saying, i think its going to be something external. Look at european equities. They still act like garbage. When you look at the euro stocks, its still down 17 , 18 from the 52week highs. Dont just stare at the s p 500. Theres a lot of stuff that agents poorly, like the russell 2000. Up next on the show, the one dollar stock thats now worth 30 in a matter of weeks. Well give you the nasm and tell you if there is still more gains in store. Financials clearly, one of the few sectors negative for the year. Thats soon to change. Why you should be banking on more gains ahead. Later, commodities King Dennis Gartman isnt buying oil in the leadup to opec. Hell be here to tell us what has him staying away. , the mastf suspense and the macabre. I enjoy keeping people up at night. My Analysis Shows your stories are actually about human connection, even love. Great storytelling needs drama and empathy. My cognitive apis can help any business Better Connect with its audience. You should try writing a book. Find a remote hotel. Bring the family. I do not think that is a good idea. Its more than a bnits reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services all with dedicated, responsive support. With centurylink as your trusted technology partner, youre free to focus on growing your business. Centurylink. Your link to whats next. Im a Customer Relationship my namanager with pg e. Er, ive helped customers like plantronics meet their Energy Efficiency goals. So you save energy and you can save money. Energy efficiency and the environment go hand in hand. And i love how pg es commitment to the environment helps a Community Like santa cruz be a better place to live. And being able to pass that along to my family is really important to me. Just being together and appreciating what we have right here in santa cruz. See how you can save energy at pge. Com. Together, were building a better california. Welcome back to fast money. A big day for the health care and biotech space today. Allergen tweeting that hes taken a large stake in the business, saying hes supportive of ceo brent saunders. No reason to believe that the investment that was made for the influence of the actions of management or control of the company. Thats not all. Theres also some deal making heating up in the biotech trade. Announcing its agreeing to buy celator. Are these signs that the bottom, guy, is in for great signs, actually. Ibb is what i look at. If it closes above 285. Biotech feels like oil felt like four, five months ago when it cratered, started casually coming back. Nobody believed it, including myself. Then you wake up one day and its up to 75 to 80 . Im not suggesting thats whats happening here. But these are all good signs. One thing about allergen. It traded basically unchanged on the day. About a month or so ago, pete pointed out unusual activity in allergen when the stock was trading either side of 200. Im wondering now if what he saw was on the back of what was announced today. You get this big huge cash come flowing in as well. Carls obviously going to push for buybacks. We know how this works. This is a company thats very leveraged and theyve got a huge amount of debt. They have a great ceo that carl has familiarity with. And take a look at the entire company and the way it is built. It is not just like valeant. They actually spend money on r d. Theyve got an incredible pipeline. Its a really interesting company. Im specifically talking about allergen right now, not the entire biotech space to me. The space is really toxic. Its still very uncomfortable because of the political side of things. Depending on who gets in the white house, politically, biotech has some interesting battles in the next nine months or so. That would override Everything Else . I think it makes them more difficult to trade. Youre not just trading off of pipelines anymore, youre trading off of the land scape and pricing of those pipelines. There are probably a lot of babies thrown out with the bath water. I think well see pockets of it continuing to be terrible. Particularly as the valeant thing, we get more clarity there. I dont know, youve got to be really good to be picking trxx. One of the ways im playing it right now is the xlv. Look at the etf and what its made up of, big pharma stock. They have good yields. Some of them are cheap, some are very reasonable. If you ever get the pickup like guy is talking about in some of the beatenup biotex, you have the xlt making the move back to the 52week high. Welcome. Great to have you. We didnt welcome you. I apologize. Thank you. Listen, talking about the 15 correction, what would biotech do through that . Would it move with the market . Would it do worse . Would it do better . I would think theyre a little more protected. You would think, right . Lets say, play 9 game, 15 correction. Ibb given the run that its had might underperform in that scenario in a 15 down scenario. I disagree. I think you want to stay away from the xbi, the ibb. I think were in a market here where you actually want to own and keep oeng strength. You probably want to keep selling weakness, especially when the broad market you do get the biotech mixed in with the pharma. Teslas annual Shareholder Meeting kicked off literally moments ago. What about the giga factory . Set to open in july in theory. Phil lebeau will join us with a special report. Im simon hobbs. Youre watching fast money on cnbc, first in business worldwide. Heres what else is coming up on fast. Liftoff thats basically what the banks have been doing since the fed signaled a rate hike is coming. But should you bank on more gains, or is it time to take profits . A top technician weighs in. Plus, the commodities King Dennis Gartman says it wont be opec that moves the oil market, but instead Something Else. No the horror. Find out what hes watching, and where you should put your money to work. Welcome back to fast money. Clearly financials, a hot topic of conversation again tonight. In fact, one of two s p sectors still negative for the year along, of course, with health care. The banks are now less than 1 away from turning positive. And with the fed rate hike looming, can you bank on more bank gains . Richard ross is checking the charts at the smart board. Richard, whats the verdict here . Thanks, simon. We think june is too soon for a buyer of financials. We know about the plethora of catalysts. Theyre not all going to be a positive. What are they going to do . Theyre going to drive volatility and volume. You know who looks both of those things . This guy right here. Keep in mind hedge funds and onlies, as theyve been since 2012, lets go to the chart here. S p financials, yes, were still in a down trend. But an impulsive move off the low. What we like on the pull test and hold the 50day. Back above the 200 for the First Time Since here. Now, note what happens. Back in august we get the rally. Boom, thats a failure there. This time we cross. So whats the macro behind the financials . Whats driving that run . Heres your twoyear yields. This can be your best friend or worst enemy. Lets start with the former. You see the breakout from the triangle, bullish flag . Thats telling you the hike expectations are coming higher. Whats the dark side of this trade . Boom. The 210. Guy loves this one. In theory, this is terrible for financials. This is the flattening of the curve, the twoyear yield is going higher, but the tenyear giving you the flatter curve. Financials, best performing sector quartertodate, up 5 for the quarter. For some its just a bearish delay. Now, how do you take advantage of this . Black rock. Look, its got decent lows. Pretty good capital return story. And its got a Double Bottom base of support. Thats good enough to give me the high and the low. Im a buyer of black rock. Im a buyer of financials. Okay. I think thats what do you think . The black rock one, i dont think of as much as financials. I think more of it as market related, stock market related. Etf related. Looks like so far, so good. Its pushing up against resistance we saw in 2015. Let me just say this. Rich ross just rattled that off. For the folks at home, that was no teleprompter. That was just him doing his thing. Unbelievable. What worries me is the 2010. That spread continues to narrow. I understand why people are buying banks because they think the back end will rise. I dont think it will. The reason for that is i think were in a huge deflationary global spiral. Thats a whole other show on friday at 5 30. Looking forward to it. Thats called options action. When you look at some of the main components, some of the top ten, jpmorgan, still 8 from the 52week highs, citibank 24 , a lot of bank stocks acting poorly. You better get that yield curve to have the stocks make the sort of run that i think the s p will need to break out or that inde see in and of itself. Black rock, larry has been less than sanguine about the stocks as of late. Weve seen several weeks of these i didnt think you were coming to me. I can feel it, though. I like financials, citi, and a couple of financials hitting recently. Options have been there for a while now in jpmorgan and other names. Youre steering this ship. You can do whatever you want. Ive been on the wheel. Im just doing what im told. A big day for Michael Coles with the stock rallying. Well tell you why the retailer could move 10 on earnings tomorrow. Teslas annual Shareholder Meeting is under way. Will the ceo give any updates on the giga factory or what about hitting production numbers. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. Because no one knows like at t. Welcome back to fast money. Crude oil a slight fallback today. A steady climb into thursdays biannual opec meeting where leaders are expected to make little headway in cutting global production. Is crude oil a buy before thursdays opec meeting . Dennis gartman says no. He joins us now. Dennis, welcome back to the show. Good to be here, simon, thank you. Why is oil not a buy . You believe as many people do that opec is essentially broken here. Yeah. I think opec really is broken. Opec will continue to be around. Always good to have meetings. But they should be able do nothing Going Forward for a very long period of time. You do have two religions at a clash who are working to make sure that they take each others market share. The iranians and the saudis are absolutely at one anothers throat. The iranians have been able to increase production much faster than anybody had anticipated. The saudis have made it abundantly clear that they think their own oil is a wasting asset over the next 15, 20 years. They intend to sell it as they can. Its going to be very difficult to Push Crude Oil much above 50 per barrel. Just a lot of supply coming at you from the iranians, coming at you from the saudis. At 50 with the contango making it 52 for the one year forward, almost any good fracker, whether hes in the balken, in the permian or eagle ford, will make money. Plus you have a lot of ships offshore in singapore, in the persian gulf, and even in our gulf. Tankers that are loaded with crude oil. Theres just a lot of supply. Demand is strong. Its reasonable. But supply is there. I think its just an overhead supply that will keep crude oil from going much past 50. This is karen. That meeting was just about as bearish as it could be, yet oil didnt seem to respond like people who have expected. Do you think theres bullishness built in here . Karen, not really. I just think theres just so much supply that can come at you at these prices. Whether its here in the united states, whether its from iran, whether its from saudi arabia, whether its from lets be blunt. Weve had some bullish news that has pushed the news higher. You do have the problem with nigeria, a new group there that continues to take production offstream, a new and rather violent group. But you have the canadian circumstance come at you. The nigerian circumstance come at you. This is the best youve been able to get. The contango in the past several days has begun to widen again. Which is also a sign of impending weakness. If you make me do something, id rather be a seller of crude oil up here. Im not going to be aggressive with it, but if i have to do something, i think the chances are the next 5 is lower rather than the next 2 being higher. But you dont sound sure enough to actually call it now a ceiling, correct . No. Im considering it. I havent i trade only from my own account. Im considering being short. I know for a fact i dont wish to be long. Thats one thing. And thats a bit of a change. Id rather not be long of crude oil. If im going to do something soon, its probably to be a seller. But am i going to be aggressive with it . Not really. Dennis, good to see you. Thank you for sparing the time. Dan, whats your view here . If you think the next 5 is going to be lower, then i think you look at the xle, etf 40 of that is exxon and schlumberger. I think you can see the break a pretty sharp uptrend that has been in since the lows in february. I know the xle is a lowball vehicle way to play if youre looking to express a bearish view in crude. He can speak to this. Ovx topped out at 81 and change back in february. Today one of the biggest moves to the upside its had. Im wondering if some of the jawboning now, like it marked the bottom on february 11th, i wonder if its marking the top. Id rather be a seller than buyer. If it is the top, some of those bottle rockets would be better to short where youre protected. In the meantime, we have now a news alert on under armor. Lets get to seema mody. This is in relation to the bankruptcy proceedings. Under armour updating its full revenue guidance, lowering estimates to 4. 93 billion versus estimates of 5 billion. The company says the Sports Authoritys bankruptcy and liquidation will cost under armour at least 23 million in a write down in the second quarter. Second quarter operating income is expected to range from 17 million to 19 million, down from 35 million the first quarter, while 2016 operating income is seen between 440 million and 445 million. Shares of under armour down 3 , now even 4 roughly after hours on this guidance. Simon, back to you. Seema, thank you very much. The latest on under armour. People will remember under armour will be on the march. If you look through these numbers, look at the growth theyre projecting for 2016, Revenue Growth up 24 year over year. When you look at this, i think this really helps create an opportunity. If youre looking at Something Like under armour, be careful of one thing, they have incredible growth. If it ever starts to slow down, that will be a problem. You look at whats going on in the nba right now, nike versus under armour, steph curry versus lebron james, theyre spending money to grow in the footwear world. Thats a huge growth area right now for under armour. The pullback could create an opportunity. When Sports Authority filed for bankruptcy, they thought it would be able to operate in a smaller footprint and it ended up being a liquidation. You could take some of the stock and divert it to other places. Now its just going to be dumped on the market. And theyre getting a greater and greater presence in dicks sporting as well. Okay. Coming up on the program, elon musk speaking to shareholders at teslas Shareholder Meeting. Phil lebeau is here in new york to break it down. Michael kors gearing up for the Earnings Report tomorrow. Why the stock could be a screaming buy. Thats later. Much more fast money still ahead. The side effects. Hey honey. Huh. The good news is my hypertension is gone. So why would you invest without checking brokercheck . Check your broker with brokercheck. Of fixodent plus adhesives. They help your denture hold strong more like natural teeth. And you can eat even tough food. Fixodent. Strong more like natural teeth. Fixodent and forget it. Welcome back to fast money. Teslas annual Shareholder Meeting is now under way. Phil lebeau joins us with the latest headlines. Heres the headline. Elon musk started off by saying i want to talk about the history of tesla. Maybe two hours from now before we get any news. Frankly, i dont expect any. This is an interesting period that we have coming up here for tesla. 2016 really sets up whether or not they can make it in 2017 and 18. Look at what tesla has in terms of bench marks. In june, basically in the next month, theyll lock in the design on the model 3. That could slide a little bit. But they cant wait much longer if they want to make the first delivery by the end of 2017. In july they have the opening of the giga factory. Theyll start ramping up production. That will be the first chance for the media to see it. Theyre building it now. The giga factory . Yes. Its done essentially. Its not up to full capacity. But its done just outside of reno. Later in the year, real question is whether or not they hit at least 80,000 in annual deliveries. You know a lot of people are more than skeptical. Is there any question they actually hit it . I dont think that could happen. I mean, would you be surprised if it youd be shocked, wouldnt you . I dont know if i would be shocked if they didnt. I have heard from people that they are increasing the production, especially on the model x. And that there is momentum there. But weve seen this before with tesla where they have momentum and when the actual delivery numbers come out, theyre not quite to where they should be. To be clear, you dont believe theyre anywhere near it . Yeah. It wont shock anyone to i think there are more than enough people if they came in and said at the end of the year, we delivered 74,000, people would sit there and say, okay, im not surprised. Theyll talk it down over the course of the if theyre not going to hit the 80,000, they will. I havent run the complete numbers. But theyve got its back loaded. Second half of the year is when they have to deliver. People were surprised about the model 3 estimates they think theyre going to hit in 2020 or 2018, Something Like that. Yes. What about lithium ion . The batteries that make all this possible. Is there an issue theyll hit some sort of snafu . The big auto guys are getting into the market massively. They believe the supply will be there in order to supply the battery packs to build the battery cells. I havent done a deep dive on whether the lithium ion market, that commodity is going to be swamped. At some point theyre going to run into some issues. Thats the big question with the giga factory. Thank you, phil. Glad to be here. The stock sold off, it ran into the announcement a couple of months ago. The model 3 release. And i think people were excited about it. But theyre not going to be delivering cars en masse until 2018 for all intents and purposes. The model s is a expensive sedan, when a lot of competitors are getting into the space. I think the stock below 200 is probably a level, if youre one of these people who wants to buy elon musk, buy the future, but i wouldnt be buying here and i certainly i would love to hear what you think, karen. A girl fascinated by tesla would love to have one. You saw elon musk recently. Hes a visionary. Steve jobs type of visionary. However, i think no shot at the production. Which is okay. All of that being said, too rich for me. At some point i probably will buy it. Do you have to believe in the production numbers to buy one . No, i dont. But you have to believe in the production numbers if you own the stock, though. The stock bumps up because of the fact he said he can deliver 500,000 by 2018. Can he get to 80,000 this year . Doesnt seem like something possible yet. Still ahead on the program, looking for opportunity in china. The biggest one might be not be what you think. Weve got a special report right after this break. Plus, well tell you why traders are betting that shares of michael kors could take off. After its Earnings Report tomorrow. Thats next. Youre watching fast money on cnbc, first in business worldwide. This car . Came courtesy of james and patricia thompson. This tv . Margaret and tom lee. The championship game ball . That was sebastian diaz. Good guy. And all i had to do was ask for their money and pretend i was investing it. Their life savings is now my lifestyle. Female announcer dont let someone else live the life youre saving for. Find out if youre dealing with a registered investment professional at investor. Gov. Its a great first step toward protecting your money. Before you invest, investor. Gov. Its been hard to bet on china over the past year, there could be a major opportunity that investors are missing. Seema mody has the details from hq. Speaking with many people on the ground in china, simon, over the last two weeks, its clear health care is being seen as the biggest untapped opportunity in china. Roughly 96 Million People have diabetes in the country. One of the highest rates in the world due in part to the consumption of sugary drinks and adoption of a western lifestyle. Theyre now getting overweight and obese at a fast rate. Thats creating an opportunity for drugmakers that specialize in treating diabetes. At the same time, china is dealing with a rapidly aging population. By 2040, over 20 of chinese population is estimated to be over the age of 65. And the president s decision to end chinas one child policy doesnt seem to be encouraging more families to have kids. Its simply too expensive. The other big Health Concern is chinas ongoing pollution, which i witnessed in the air and water quality, which continues to get worse because of decades of industrialization and lack of government oversight. There are chinese pharmaceutical giants that are working on new medicines to tackle its health care crisis. Simon . Interesting. It is interesting, yeah. Seema, thank you very much. Seema mody there. Do you feel able to theres the idea that theres a lot of could you trade that . You could trade it through American Companies that are feeding into china, if you feel like it. Like a starbucks, apple, those types of names, or Something Like a chl, china mobile. When you look at the dominance that they have right now in that market, simon, and 64 million additional subs on the 4g system came in just last quarter, 64 million, weve got 300 Million People here. You just look at some of the numbers. Theyre staggering. They give you almost a 3 yield. A lot of them are hiding out right now. Telecom, that type of thing. Getting almost a 3 return right here. Im not quite sure how you made the link from there to the china mobile. The diabetes side of it. Obviously i own pfizer, merck. I actually was looking at how do you trade china right now. Thats the way i would trade china. Hes got a sharp mind, baby. He took you from point a to point b. Just saying. We move fast here. We dont lollygag around. Lets go from china to the smart board with dan nathan whos tracking michael kors ahead of tomorrows earnings. I wouldnt exactly call that a gra tutuitous lead he made th. Of course, reports tomorrow before the opening. About 10 move on the average over the last four quarters, moving 16 over the day following its earnings events. Options volume hot today. Six times average daily volume. The june 46 calls. Break even at 47. Force when you think about it, look at the chart. The stock is down 30 from its 2016 highs. Look at this gap. This is when retailers, apparel makers were getting slayed last year. The stock was down in sympathy here. I think we need to take a day to trade like this. This trader is trading to fill in that gap. Think about the move, down about 60 . This is one way to play in a contrarian fashion into an event. Karen, what do you think . Im long michael kors. I think this stock has been hit three times already. It was down on nordstrom and fossil. I think theres a miss already built in here. It is cheaper by a ridiculous amount than ralph and coach. And still got it in your view strategically . With that balance sheet, close enough. I mean, close enough. My worst Case Scenario is 40. For more options action, check out the full show 5 30 eastern friday with dan and the rest of the crew. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. 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Tweet me jimcramer. Every night i come out here for two big reasons the first is obviously i like the attention. But the second and more important reason is i want to help you build and preserve