Transcripts For CNBC Fast Money 20240714 : vimarsana.com

Kicks in in china and the u. S. Manufacturing sector contracts for the first time in more than three years. All three major averages ending the day in the red is this just the beginning of a bigger september slide guy . We talked about it last week. Quite frankly i thought we would rally today, i thought thursday, friday made sense we rallied, i thought we would rally again today and towards the end of the later part of this week, early next week we would start to slide. Things are not bullish for stocks right now if the only case for bullish in stocks is that valuations are reasonable and rates are going lower i think you are on pretty thin ice it feels like the market needs to have the next leg down. What ive said before and what i will say again, i think the market bottom will be defined when the vix trades on or around 30, we are at basically 20 now you do the math. I think there is a huge move coming and i think its going to sort of begin in the middle part of this month. Dan yeah, so, you know, carter was on the show on friday, talking about this range weve been in the s p 500 since that first gap down august 1st on those announcements of new tariffs and we have just been banging around in what feels like a 75point range in the s p 500. I think the thing that you want to watch is yields obviously september 18th is going to be a huge focus with what the fed does, whether they cut 25 basis points or 50 basis points, either way i think the market is either disappointed or theyre freaked out and so to me, you know, i think that that 200day moving average in the s p 500 down at 2800 thats a really big level if we go there first i think you want to keep a really close eye and then rates, ten year treasury yield trading where it did today, a news cycle low, 1. Had a or Something Like that, keep an eye on that, if that goes precipitously lower i think the s p 500 falls. Thats almost like a no win situation for stocks. I think it is. Whether the fed cuts from 25 or 50. What a surprise from dan. There are a lot of bulls out there who say lower rates the rate great for valuations, we can have valuations that go higher but are we at a point where rates are so low they mean rates are low because the economy is slowing weve had a lot of strategists come on the market on our show and talk about the market in the context of a fed thats maybe being preempti preemptive 50 is not there there and they think 50 dan thinks bad news will be bad news up until this point a fed and i mean historically for points where you saw the fed go into an easing cycle even though we heard the last easing it was a mid cycle adjustment that would probably be good for stocks what dan and carter on friday and what people should be what is noteworthy is 24 sessions of essentially 150 point range on the s p which is pretty extraordinary considering the elevated vol within that time i would say if you want to find a Silver Lining, the Silver Lining is that during this time we have devalued the juan, youve brought the dollar up over 90 and the dollar is typically a wrecking ball, youve had the ecb scramble in place and possibly deliver almost nothing next week when they report and yet here we are 4 from all time highs my guess is if you are a technical guy youre looking at that and say its bullish. What if you are a value guy i am always value oriented and normally things trade down a lot and i think, all right, too im to start buying. Im not buying anything right now. Im really concerned, i think were 3. 5 off the high, which really is nothing and i dont like how we set up i mean, to me the trade issues are front and center and i like to base valuations on fundamentals we are in a bit of a period where we dont have fundamentals right now, most of the companies have already reported and i dont even know if it will matter how good the Third Quarter will be because we have these this tariff situation, it will be much more about whats the guidance, what are expectations for the Fourth Quarter, how are companies feelin this prolonged trade war an to be settled in the long term that that will have cumulative effects of hesitation by ceos, maybe the consumer, we havent seen that yet, the consumer is still out there, but it just makes me concerned and im not out there buying to your point the vix, im surprised the vix isnt higher. What are valuations on the s p 500. 17, 17. 5, which is not ridiculous i mean, historically its pretty reasonable i would think and given the environment we are with rates its probably very attracti attractive, but markets go down for other reasons other than valuation. Im not suggesting this is 08, 09 but quite frankly valuations had nothing to do with the softs we saw then. Valuation argument i understand but not necessarily the right one. With that said if youre looking for something as an indication and dan has talked about this, the russell, thats been a very good leading indicator and 145 which is we are in a whisper of that, thats sort of your line in the sand. I think if that were to break below 145 its going to make a run towards a december low, a run towards a december low is around 130 and i think that drags the s p down. Its interesting. A lot of people are trying to look at data points to try to figure out when own to recession and i think there is some stuff in the market telling you things are topping out. You mentioned small caps if you look at the transports overlay that chart for the russell 2000 they are down 15 from their 52 week highs the kre also down 15 , 16 its the same chart, the same wedge, approaching really important technical support. Look at the ibb, theres a lot of stuff that is in major correction not acting particularly well. So i think there is some kind of tea leaves in the market if you want to look at them by the time you piece together all those Economic Data points it tells you pinpoints that we are going to have a recession at some point this 2020 or 2021st going to be too late im going to tell you this, the last two times we have had recessions in this country the s p 500 has been cut in half both times 2000 to lows in 2002 and then 2007 highs to the lows in 2009 thats just a fact thats what happens when we do this weve got some breaking news from the fed lets get straight to Steve Liesman with the details. Boston Federal Reserve president in a late speech is pretty much unconvinced about the need for any more rate cuts. He says should the risks that he talks about the trade war, Global Economic weakness become a reality in u. S. Economic data then he says the fed should ease aggressively but so far economic forecasts the level of the market, talks about the level of stocks, talks about credit spreads, so far they do not indicate the kind of weakness that everybody is so afraid of he does say that the trade disruption and the global weakness are the biggest risks in the u. S. But hes still expecting 2 growth which is slightly above the potential in the second half and he says its right around this potential range. Gradual slowing of gdp is what he expected not a single of a coming recession you may compare and contrast that with st. Louis fed president jim bullard who earlier today suggested the fed go 50. You either get nothing, you get 25 or you get 50, melissa, back to you. So when he says that the fed should cut aggressively if the risk to the u. S. Economy materializes, whats your sense of what that means i mean, its not a midcycle adjustment and its a string of cuts, because as you had mentioned this morning, steve, we are already expecting 100 basis points of cuts between now and april so more aggressive than that is i dont know what. You know, i think theres a couple ways to look at it. The first thing is for a guy like rosen gren i think other members of the board does their outlook for the economy come down substantially they are still expecting 2 growth all the folks who dont want a cut that we talked to in jackson hole and since are people expecting 2 growth which is what they had expected, also what they think the potential of the economy is those who are looking for weaker growth would be looking for greater or more cuts and the weakness would show up in stocks they would think they would show up in employment and it would show up in the gdp numbers. All right steve, thank you. Pleasure. Steve liesman how does this factor in . We have a fed meeting in a couple weeks or so. Its massive for the market dan was right to at least highlight that your decision tree is certainly i think theres going to be volatility based upon this fed. I believe its going to be harder for the fed to apiece everybody here we have seen for a couple meetings in a roam it has not been that easy for the fed to thread the needle, a term thats way overused there is no fabric you could knit that would allow these guys to get this thing. What i want to say about the market is the other side of all we hear about is you actually see the s p at 12 to 18 months after an inversion think about the stock market and the economy. Typically the stock market bottoms six months before the economy does so if you think, you know, that this is going to be a nasty, nasty, pull back, then obviously you could say that this is going to get much, much worse and stocks still have a ways to go because the economy is not within six months. But if you think that this is not going to be a deep recession, we get a trade deal, you can make some arguments that historically the stock market has done what its supposed to do and maybe all its supposed to do. When you think about recession, you see the consumer and the consumer is still very strong. Right. How does that happen . I dont know. I was looking i was actually looking up today what causes a recession and its high Interest Rates, high unemployment, right, and we dont have some of those fundamentals pillars one thing i will point out thats interesting, though, the dax even in the last year even if rates have gone subzero and significantly subzero the dax has rallied over the last year so lower rates supporting valuations. I guess but you guys are forgetting one point about this we are also putting this recession thing out way into the future to tims point risk assets start going lower. Negative wealth effect plays into the recession big time. You start overlaying some of the things were talking about with this pmi data that we see. That means if we are going to go into that sort of manufacturing recession that means less hours worked, means job cuts eventually it just starts happening, little chink by chink, that sort of thing. To me no one is going to be able to put their finger on it but i think theres enough data here to suggest if this trade war goes on cut to zero, have a ball, it doesnt matter because Global Growth is slowing right now. When dan has have a ball but it doesnt matter. We know hes frustrated. When the fed got aggressive cutting rates they went to 1 in 2001 and 0 in 2008 the s p still got cut in half. Thats the point, it just doesnt matter. I agree with you and the wealth effect quickly of markets and what rosengren talked about right now it actually feels pretty good for investors and that wealth effect has not bit but the dollar is the biggest drag in the economy. The conditions are fine. Our next guest says the fed can keep cutting rates here, actually we have some breaking news sorry. Were going to go straight to wilfred fox with news on brexit. We are awaiting the result of that vote in parliament to where we believe mps are trying to seize control from the government, from Prime Minister Boris Johnson of the agenda and they have succeeded. The rebels have succeeded and defeated the government 328 votes to 301 so abos johnsons own conservative mps must have voted against him for that to take place what does this mean now for brexit it means tomorrow there will now be a vote aimed at tying Prime Minister Boris Johnsons hands to take no deal off the table because he has lost tonights vote its highly likely tomorrows vote will go similarly to today, the same rebels would once again vote against Boris Johnson and his hands would be tied to prevent no deal. Hes speaking at the moment and hes likely outlining the fact that he expects to fire those torrey rebels from his party and this all increases the likelihood of the country heading towards a general election in the coming weeks because the government has just lost a very significant vote and the first big defeat of the relatively new Prime Minister Boris Johnson. I dont know if we can check in on the british pound which earlier in todays session fell below the 120 handle, its well above that today, recovered intercession and hasnt moved much on this vote. This vote was kind of expected, though a bigger defeat than perhaps Prime Minister Boris Johnson was expecting. Certainly a bigger defeat than he wanted to see melissa. So, wilfred, when you say further elections, i mean, if the vote tomorrow basically ties Boris Johnsons hands further, that means that he is in jeopardy no, it doesnt mean he is in jeopardy immediately kind of conversely because his hands have been tied he is expected to personally seek an election so that he could get a freshman date and perhaps a majority to untie his hands, as it were, himself its not a foregone conclusion, though, that that election would be granted to get an election that he seeks himself he requires a twothirds majority, a big hurdle, of course, while parliament is so divided though it is expected if he tabld it those who have been calling for change would be kind of inclined to vote for an election having said they want change, they could hardly say but we dont now want an election the first step tomorrow is the actual vote on whether or not no deal will be taken off the table. The expectation is the same rebels that voted against the government today would vote against them tomorrow. So thats largely sort of expected to be a foregone conclusion tomorrow and then the next thing to focus on is does the Prime Minister seek and get granted a general election or not. Got it. Okay wilfred, thank you wilfred frost with the latest developments on brexit. So if a hard brexit or no deal brexit is off the table it should be very interesting meeting next week. Right but, again, there is no real the bad stories outweigh the good stories right now in my opinion. Again, the market is hanging in there and thats the ultimate judge and jury, the fact that we are within 3 of an all time high people say its shed all this negative news, looked past it, the market must be fundamentally strong, its hard to argue against that, but with all these headlines out there at a certain point this matters the vix at 20 is too low the vix in my opinion will print 30 and when it does that should be the culmination for this market. I think in the micro of this moment what the pound means to me is the pound is a risk currency seeing the pound break through 119 was a very bad risk moment overnight, it coincided with you can argue who is the tail, who is the dog, but i want to see the pound if im looking to take on risk i want to see it back over 121. Were just Getting Started here on fast money. Up next, more bad news for boeing, we will tell you what sent the stock into major headwinds today. Later protests turning violent in hong kong were live there times squarine new york city. Much more fast money right after this by the strolle s [ growl ] good boy. Hey. Hey. You must be stevens phone. Know whos on your network and control who shouldnt be with xfinity xfi. Simple. Easy. Awesome. Welcome back to fast money. More bad news for boeing, the stock under pressure today on a report that the 737 max might not return to service until 2020 phil lebeau is in Niagara Falls with the details reporter this report by the wall street journal highlights something thats been simmering under the surface when it comes to the 737 max, will regulators around the world, whether its the faa, the europeans, china, canada, brazil, will they all be on the same page when it comes to recertifying the 737 max. This is what boeings expectation is, sometime this month or early next month it will apply for recertification its boeings expectation that shortly after that the plane will be recertified and then sometime in the Fourth Quarter it will return to service. Now, for airlines they continue to move back their schedule for when they expect the max to fly again. Remember we heard over the weekend from American Airlines it has moved back the max on its schedule to at least december 3rd. Last week united moved it back to december 19th and we know for some time southwest has pushed it all the way back to the beginning of january as you take a look at shares of boeing while it was under pressure today in part because of this report but the market overall, remember that most people look at the stock and they say eventually because we have not seen mass cancellations, in fact, we havent seen any cancellations, this is a delayed cash flow gain and the question is when does the cash flow pick up when those deliveries return and, again, this all hinges on whether or not regulators start to sign off on the max recertification sometime in the Fourth Quarter melissa. Could u. S. Regulators approve the 737 max for a return to flight and they fly in the United States but not overseas yes definitely a possibility and i wouldnt be surprised if that happens, that the faa says, do you know what, were comfortable with this. Now, in the past, melissa, when the faa made a decision 99 of the time the rest of the world went along with it thats not going to be the case this time with the max there will be some regulators in other countries who may say its good enough for the faa and weve looked at the data its good enough for us, but dont be surprised if the chinese and europeans take a little bit more time. All right phil, thank you. Enjoy the falls. Phil lebeau, Niagara Falls on the canada side. Boeing shares are down 20 since the worldwide grounding of the 737 max, what should we expect from boeing you get into production lines, if you actually get a big enough of a delay you could have a Production Cut which gets in