Are geared to battle it out on bitcoin. One is telling clients to buy the Bitcoin Investment trust the other says its a bubble ready to unravel its a crypto clash you cant afford to miss first, what looks like the beginning of the bond blood beth, the tenyear yield climbing toward 2. 5 dow sinking 200 points at the lows of the day before closing off those lows, still having its worst day in more than a month was today a glimpse, a little peek into what a rising rate environment looks like for stocks is this the biggest risk to the rally, pete . I would say the velocity of this move is what part of the problem is the die where he gestion of wats thing move as fast as it has if we get to 206, people will start to freak out telephone stocks, at t, verizon, were all affected. Boeing had already had this monster day yesterday. As long as the velocity slows some, it still comes down to these earnings the earnings have been powering this market. Thats whats been pushing us to new highs. If you go back to the earnings, you go back to the fundamentals of whats been going on in the marketplace. Its industrials weve got to see, if the speed of this move continues on the tenyear, then i think thats going to put at least a pause. Coincident with the session lows, we saw a turnaround also we did. Ecb is tomorrow, well get feedback on that it absolutely was i think earnings and ecb expectations that shifted it a little bit for earnings, you had boeing, very i mean, look at the move that stock has had in the last six months look at the sort buyin into that name. Thats name i would defend aggressively chipotle, think about the money that came off the table in chipotle, that was a debacle you had stocks with higher valuations report, and they missed expectations. I think the pain below the main indices was much worse than a couple of these names. Chipotles numbers were terrible, or at least their near term outlook for growth, the queso, and guy called that yesterday. Totally nailed it this is a glimpse, mel, into Central Banks and normalization, what it might look like. I dont think rates are going to zoom higher. Were at a fiveyear rate. Having said that, i think things are going to move. I think this is extreme positioning. I mean, youve now heard four or five i think people on the show, and let me be the sixth or seventh, the rsis, the relative strength indicators on the industrial average are at levels we havent seen in 65 years. You get complacent into this bull market. Because earnings i think have been great you can be complacent when yields remain low in terms of valuations when you see that glimpse into a higher yield world you all of a sudden say, you know what, 18 times, that doesnt really fly we talked about that, right you do think the point is, i want to be very clear because im not calling for an i am meant bear market. Bear markets begin when rates go to high. I dont know if its six months or a year or two years from now. But you need to watch rates, theyre the single biggest threat is it because the markets go too high, too fast in the short term, because they go to high, too fast. But at some point we reach that tipping point. You dont think a steady, slower move in these rates even if we have a steady, slow rate, somewhere around 3 , 4 , i dont know what it is, at some point theres a reason to buy bonds at that level and not buy stocks if rates are going higher, you have to believe in tax reform you have to believe in the recovery let me ask you a question were in the middle of the Trump Presidency forget the last five years i realize weve had a nice bounce but to say theyre off to the raises has to assume a lot of great stuff. Yields arent going to go up to a point where they disrupt the markets this year. If youre invested in the equity market, based on where the tenyear is today, knowing theres potential tax reform around the corner, are you going to take money off the table and put it in the bond market at 2. 48 . Youre asking me that because no thats what i want to be very clear about. No but i guess what i would say, lets flip it around, instead of being the bear side. If we get a stock market selloff, because rates went up too fast in this period, thats a buying opportunity how are rates going to go up too fast they have so far. I dont know in the last several days weve had a rally in rates and the stock market has been lower. Thats all i mean, thats simple but you said all right im not going to put words in your mouth rates have not gone up too fast. I want to delve into some of the stocks underneath the surface, transports were down 1. 5 or even more, homebuilders were lower im not as concerned about that if you do go by the facts, the fundamental side of this entire story, amd, that guidance was not strong people looked at that, said the earnings look great, revenue look okay, guidance not so great. This is a stock thats moved rapidly to the upside. Theyre going to take some chips off the table. No pun intended. But then later in the day, you saw some of the names start to turn back around a micron, for instance, that was starting to elevate back up. I think it did have an effect on all the semis. I think the good semis, you want to be such as like the micron im already double dipping amd absolutely turned the tech tape, it led it lower the forecaster margins werent as strong as people expected youre right, it had a massive move people took chips off the table. A shortlived sort of phenome n phenomenon its not necessarily signaling something that theres problem in those names its not part of this rotation that we may start to see away from technology into industrials . Look, since the august weve seen a rotation from defensive into cyclicals its been 500 basis points of performance. This is going to continue. Remember what got us even before to that period of august, it was mega cap tech which offered you decent growth if not very good growth weve seen major rotation. I think if we continue to get a sense of the global pmis do what theyre doing, if prices are feeding through on the inflationary side record everything thats reflationary should still be bought wall streets biggest bull says today could be the start of an even bigger pullback. That may not be a bad thing. Mike wilson is Morgan Stanleys chief equity analyst, mike, good to see you again thanks, melissa what kind of pullback are you talking about . 3 to 5 max i think tim mentioned rsis the rsi and the s p has been above 70 for 15 consecutive days thats only happened 13 times since 1975 when we see a pullback of 2 , an average of 4 to 5 so were not calling for the end of the bull market the rotation call i think is just as important, however, as what you own as opposed to how much you own that rotation call, by the way, is a continuation of the global reflation call from last year. And this is what weve talked about on this show for many times. This year was about consolidating the initial excitement around global reflation last year. Took a pause, in august they got totally priced out and it was due for the second phase thats whats happening right now. Are you recommending people do anything in preparation for this it depends on the client. In our wealth channel, most clients should sit tight, if theyve followed our advice and rotated into these light cycle sectors, theyll be fine it may feel like armageddon for a couple of weeks because we havent had any corrections all year but our advice is to sit tight shorter term people, its probably the first tradeable correction weve seen all year mike, im curious at what level in tenyear interest rates, because we were talking about that, do you come out and say, you know what, this is something more serious. Is it 3 , 4 this gets back to our original view on equity risk premiums 275 is the level we think we can get to without seeing degradation. Thats 5 1 4 or 19 times today we traded 19 times since calendar 17 we get to 2700, no problem above 275, towards 3 , i mean, its going to become a valuation constraint you said earlier, bonds become a real alternative at 3 , the real money starts to shift there. Were for near there right now theres a series of things coming together. In august, we were begging people to step in and of course people didnt want to touch stocks at that time. Other people were arguing to buy stocks too but very nervous about Balance Sheet reduction. Very nervous about north korea very nervous about the fed chair, who that was going to be. Now those concerns seem to be put aside. The biggest concern or not concern but reason for a pullback is just earnings sell the news thats the pattern weve seen all year stocks run into Earnings Companies report the good reports. And then you just state em. That could be worth 3 to 5 right there. Its not the end of the cycle, its not the end of the bull market Third Quarter earnings got priced now we have to wait for the Fourth Quarter and 2018. Have you put out a forecast for 2018 not yet, well see later in the year whats your sense right now it will be a much tougher year than this year. The last two years have been fabulous, great earnings cycle the twoyear comparisons start to come around in 2018 once tax gets fully priced, what do i have to look forward to next year will be a tougher year mike, theres probably a lot of money, though, sitting at home that says, im not in and i want to get in is this the wrong time i know you said to tell you back to buy no ones going to ring a bell for these people, when to get in and out. Youre on the sidelines right now. Are you allocating were fully invested, overweight Global Equities at this point were not doing anything right now. Our advisers who have cash on the sidelines, i tell them, look, this is not a time to be incrementally bullish. That was in august heres where you pause a little bit. If youre doing dollar cost averaging, there are times when you accelerate that. This is not a time to accelerate were not telling people to wait or pause in their regular allocations right now. Were in a secular bull market we want people to be allocating towards equities probably for the next several years Global Equities is the place to be probably for four or five years in our view. Mike, thanks for stopping by, mike wilson. Mike brought up something interesting. Its something i trade off of not necessarily in the Broader Market because the Broader Market is the Broader Market i look at individual names and rarely etfs. Home depot comes out with incredible earnings. That stock eventually comes down 10 , a buying opportunity, right back where it was. You can see that time and time again. Whether its apple in the 160s, then gets about 15 off of that, suddenly its a buy again. I think within the market, you talk about rotations all the time, but within the market, when youve got great numbers and they come out with great numbers and they sell these off, thats the great opportunities it sounds like youre thinking about a particular stock. Multiple stocks, absolutely i think if we see that happen in the tech tomorrow, that will be if microsoft, a stock i love, comes out with the earnings i expect, that will be a buying opportunity around earnings, thats the theme, he nailed it. The patterns and the way institutionals are investing these days is very different than it was three, four, five years ago. Theres a buy and hold strategy based on the fact that theres passive investing. The active funds are absolutely not turning their portfolios over as much theres less liquidity its simple, we dont want to sell until theres a reason to around Different Reasons it could be earnings, it could be whatever, end of month, end of quarter what did you do today heres what i didnt do ive said it before, i didnt cut my flowers and keep my weeds. Great quality earnings came through. A name like gm had a nice pullback today was that the top yesterday no, youre going to see upgrades if you see a break in momentum, and these are names i have a tougher time in difficult times, those are names i trimmed, that had already pulled back 5 to 10 in the last week that doesnt matter to me. I would rather get names im less confident about off the Balance Sheet, whatever that time is. I think earnings have proven to be very high quality i set myself up for the earnings coming out tomorrow i talked last night about google, how that might be an issue. Some of the advertisers out there not doing as well. Maybe that hits google but talking about that rotation, what i want to be prepared for tomorrow is if we get a selloff in google or im sorry, alphabet nowadays, if it will always be google to me. I probably want to be a buyer on that, assuming theres not some kind of weird thing in the earnings if its a selloff on a minor hit or miss there, i want to be a buyer tomorrow coming up, check out shares of amgen, sinking following earnings a top technician says something in the chart suggests now might be the time to buy plus General Electric shares continue to get pummeled for any of the top executives buying the stock, weve got a special report its a bitcoin Battle Royale tom lee is telling investors to pile in. The faceoff happens right here, twitter is going nuts about it muchor me fast money after this ah, dinner. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Welcome back to fast money. Amgen sinking in the after hours session after reporting earnings medical tell meg terrell is listening to the conference call. Reporter hi, mel, ill put the phone down for now youre seeing the shares lower after hours. The Company Really beating because of cost cutting including on research. Thats something weve been seeing for a few quarters now. Analysts pointing out that Product Sales declined by 1 of the quarter, some honing in on their new cholesterol drug sales of that drug growing a little more slowly than some expected, coming in around 83 million for the quarter versus expectations of more than 100 million. Rbc calling that growth dismal looking for updates on that trajectory on the call the company says it doesnt expect supply disruptions in puerto rico but did detail a quart quarter hundred Million Dollars in impacts amgen ended the Third Quarter with more than 41 billion in cash a lot of that overseas, guys well be listening for any updates. Back to you. Thank you, meg terrell at headquarters our next guest says when it comes to amgen, stay calm and keep dying carter, hi hi there. This is the preeminent b biotechnology company. I think whats important is this as unhappy as this it, the next chart will put this drop in perspective. We see its trading here at 173 post close now, take a look at the chart of amgen. This is a fiveyear chart, how it broke out this bottom trend line right here is exactly where the stock is indicated meaning its probably already found the level that its going to find. The key is that it flirted with breaking out once. Often you get a little pullback, which were getting. Thats no big deal, i would say. And then the real bet is that ultimately the way forward is out of this formulation. So again, it doesnt done anything wrong as a biotech but a beat the market kind of stock and best in class in terms of biotech generally. Lets talk about ibb and then im going to quilt. Oneweek performance, this column, onemonth performance. Biotech by far worse than health care, and health care worse than the market over the last month, same pattern. Biotech as a subset of health care, health care and the market lets do a few lines and take a look, a twoyear chart often you get back to a prior high and you find difficulty the key is we have a welldefined up trend, a sequence of highs or lows. How do we get there . Take a look at that line it starts with a triple bottom then add another line. It starts with this formulation. Then the final line. All were doing is checking back to that trend line which in principle should then get us back on our way of a perfectly normal sequence of higher lows, higher highs, and ultimately we take out the high, which is what this setup looks like. So i want to buy the weakness in amgen because of the news. Im not even going to ask it is taken for granted here that carter comes over does he want to come over i didnt even he could say no he could say no biotech is part of the nasdaq, its part of technology, basically, and part of health care is there a tighter correlation to be technology to be worried about a tech chart when it comes to biotech, or do we say health care is strong thats right, individual equities, its really about the beta as a group in principle, qqq type names, theres a lot of correlation, at least people treat them the same. Whether they deserve to be correlated or not. The issue, of course, is so much hinges on a few big names here one of the things about a market in general, if you have exploitation of potential, every caterpillar that breaks out, every 3m that breaks out, youve exploited the potential to break out, youve used fuel. Youll need these fellows to come forward in the next week to push higher. Did you see any change in character when gilead does the deal with kite a lot of these charts, not to get overly technical and wonky, theyve gapped up and start to consolidate. Thats usually bullish, it hasnt been this time. Almost euphoric weve seen that in semis you can start to put any dreamed multiple on it because its all unknown, right the kite thing was a big thing what we do know, though, is if you were to have to make a structural bet on a longer term basis, theres a lot of opportunity in biotech, whereas other parts of the market dont have that. In the biotech world right now, whether its amgen or gilead or celgene, are the volumes there that encourage you with what youre looking at on the charts themselves . Most of the volume has been very heavy, dropping and gapping. Weve seen that in celgene, in biib, its going to be happening tomorrow in amgen. Thats typically signs of either newsrelated selling or just general get me out a little bit, let me reduce its distribution but it hasnt damaged that ibb pattern. Thats the primary point carter, thank you Carter Braxton worth i love that call. I think large caps in favor, i want want to stick with the large cap famous kite, the gilead kite deal, that was the all year you could step into large cap biotech again. The ibbs is the way to express that