Transcripts For CNBC Fast Money 20160407 : vimarsana.com

Points. Stocks now officially negative for the year. Banks, the biggest loser of the day. Now, yesterday we started with the bears and asked them if they were ready to surrender. We start off today with tim as the most bullish voice. Did you buy stocks today . I feel the need to actually establish that what i have been is someone who says i dont think markets are cratering. I think were in a very, very high volatile environment. Which we havent been for the last few weeks, or six weeks. We probably have sideways markets for most of the year. Theres enormous amount of risk out there. Having said all that, im relatively hunkered down here. I think in the last four to five weeks we see where equities have rebounded dramatically. All the detail winds from extreme positioning are now over. The reality of earnings season is upon us. The move today in the japanese yen is disturbing. And theres nothing about this that was orderly. The good news here is i think that offers a fair amount of stability for china, in their whole currency debacle. And thats actually something that i think is actually whats better about markets here. So i remain, you know, somewhat benign here. But i do think this is a very difficult tape, and i think it will be difficult for a long time. I think you have to trade it. So this week i wound up adding to a position in kb homes. I felt like the Home Builders were under pressure. So i added to that position based on the negative headlines in phm. As far as the s p, 50 handles up or down. Until we break 200 a day, i think you have to stay with your longs. If you have compelling longs that you want to get long, i have longer disney under pressure. I stay with my apple. If there are things that you really need to buy, then add to it. But until we jump out of this range, you stay with whats working. We remain in a trading range when we have extreme moves in other asset classes. The yen reaching the highest level, and the tenyear treasury yields. Tenyear treasury down now. We have inflation running, lets call it 1. 5 . Take the inflation minus the 1. 7 yield on the treasury, you get a 0. 2 gdp. Nothings changed. I totally disagree with chtim tt china has completely stabilized. There are still outflows from the country. Weve made new lows back in february. I think this is simply a rally in a bear market. So by the way, china had currency numbers out last night. In fact, fx reserves increased month over month. Well, no, but only valuation adjustment. They sold 37 billion. Thats a valuation adjustment. For people seeing 80 to 100 billion outflow in china, that was a reason for concern. Its nowhere near the same environment. It was 37 billion last month. Youve been saying its going to 100, 110, the chinese yuan is in a very different situation. With the dollar going sideways, unless you think the dollars going back to 110, i think china is actually in a place where were in a sideways chinese market. Its been difficult not leading that charge. What worries me, the bond market is incredibly strong. The transports which led us to the upside january 20th have now been quietly going down since the middle of march. Russell underperforming as well. Gold a bid for quite some time. The financials cant get out of their way. They had a horrendous day today, led by Deutsche Bank which has quietly gone from a 20 handle to 15 handle within whisper of the low it made a couple of months ago. My level in the s p is where i thought it would stop at in the first place 2025, that should be support. Where are we in that choppy Trading Market with todays action . I think were going lower. Okay. But i dont think were going dramatically lower. China to me ultimately the market going down today is not a reason to say its going significantly further down. Thats what im saying. Im being consistent with my views. I think thats all i want to say. I think theres enough space for all of us to look stupid, or to look like geniuses. Its trading range. For me you also have to have lines in the sand. Guy says 20 25, tomato, tomato. Have your entry or your exit if youre going to stay long. Within this sort of market, what shall the areas youre looking at . I think it was monday, i mix up my days, but he said ipp would trade up to and we talked about failing at 285. Take a look at where it traded up to today and where it closed on the day. Very interesting. So i think you avoid those, but i still think theres headline risk. The gold market for maefr reason i cant identify continues to want to go higher. I think bonds go higher as well. The health care sector, i think is a place where you actually have an opportunity here. In a world where i dont think markets are going down, you should be abandoning all stocks. I actually think health care with all the obvious reasons has been oversold after being in a crowded trade. I think it has to continue to be a relatively crowded trade and i dont think its as crowded. I think it will be very defensive for most of this year. A place where i actually think you have fundamentals that line up with the market that has a lot of disconnect. People will be reaching for food stocks, for staples, and those are things that i would gravitate to. Executive directory of u. S. Usb, julian, welcome to the show. You say the vic should be a 20. The s p 500 should be around 1970, which is lower from where we are. What does that path look like to these points . That path looks like sort of torture over the next several weeks. Okay. Basically because we have to remind ourselves that this is a different environment than the last 3 1 2 years. This is a high volatility environment. You had the rubber band stretched to the down side in february. You had massive capitulation. And, you know, were happy to see it. We think the markets will finish higher by the end of the year. In fact, when the vics trade back down to 14 where it was yesterday, and weve essentially gone up in a straight line, at the same time the expectations have gone from 2 growth to the gdp at 4 . Theres a disconnect that we think there needs to be some discomfort felt. After todays session, we see we can go down to 1970, but you still say the markets will finish higher for the year. Thats right. Thats right. Basically, this is one of those stories where the investors are finding their footing. The economy is finding its footing. And its very clear that the fed is going to err on the side of dovishness, so we dont have to worry about the rates running away on us. When the stocks are trading in the neighborhood of 16 or 17 times, and theres Earnings Growth potential for 2017, thats a good multiple against the julian, rates running away from us to the upside. It seems just as bad as they ratchet back the other way. The u. S. Doesnt appear to be going higher anytime soon. Is that equally as bad . Thats definitely an issue. I think that is part of why investors are so perturbed by whats happened in the yen. It wasnt supposed to work that way. Negative rates were supposed to weaken the currency, but what were finding out is that basically whether its cash under the mattresses or what have you, it strengthens the currency, and thats been a reaction thats happened in japan over the course of years. And the outcome is definitely in question. Which julian is one of the reasons negative Interest Rates in japan shouldnt have worked anyway. Its a savings economy. It probably wouldnt work in the same way it would in other economies. But if rates are negative around the world, shouldnt this put an upward bias on equities, especially those delivering an earnings yield significantly better on raa relative basis fr where you have been in a long, long time . It should. But the first part of the equation, the stoking of a b more inflation. Gold is telling us that that is starting to be an issue. In this environment, thats a positive if we get resumed economic growth. But in this waitandsee type of attitude is the pullback on health care. Thats a sector thats going to grow its earnings in the first quarter, which is a very dicey quarter coming up next week. But also, throughout the year, and its been left for dead if you will, given politics, given the volatility in spec pharma, and that you had a major merger break, we think those are cathartic events and health care will work here. The s p 500 sectors, which do you see having the most risk on the path to 1970 . Actually, this is probably counterintuitive, but if you look at it, both cyclicals and defensive stocks got bid up in this environment of the last three months. And that doesnt really make sense. Actually, for us, if you look at it, Consumer Staples are trading at the highest multiples of all time. And thats almost potentially a defensiveness bubble. So if we see news turn around and news get better over the next several weeks, and all of a sudden, perhaps japan intervenes, what have you, the tenyear yield starts heading back up, that sector is very vulnerable in our view. Julian, thanks for coming by. Thank you. I like that defensiveness bubble. Whats interesting, look at the utility sector. That has been a huge beneficiary, where people are coming in and buying yield. But over this week, youve seen a reversal of that. Youve seen reversal of at t, in verizon. Some people that i talked to from the currency side of it actually talked about it as being an unwind due to the japanese yen. I didnt know if it was going to be that in agreement, but those defensive trades are looking vulnerable right now. I dont think so. I dont either. I think you get one day theyre vulnerable, and some days theyre definitely where they usher in a lot of money. The chart looks like its in nose bleed territory, yet it keeps ratcheting up. You cant get the yield anywhere else. Theyll continue to grow. I think on the cyclical side, i think i would agree. What i was pointing out a month ago, or six weeks ago, is that i thought the transports were still relatively cheap to their history and they needed to balance. You cant make a huge argument for transports here. Back to, you know, i want to set something straight. When i mean victory laps, after three or four days of market pullback, were framing this as a bulls bears debate, and i dont think it is that. I dont think its a time for that. Its for saying which parts of the market are oversold. In some places even in emerging markets i think youve seen the worst. Ultimately i think were at a place where markets have a lot of discomfort ahead of themselves. At what point does coke enter that defensive bubble in your view . Do you still like it . As long as it stays above 44 1 2, 45, i think youre fine. It does feel like its breaking out. To steves point, it does feel like a stock people continue to pour money into. Coming up, whats next for pfizer . The name that could soon be on its shopping list. Barclay, an analyst behind the call when fast money returns. E trade is all about seizing opportunity. And id like to. Cut. So im gonna take this opportunity to direct. Thank you, well call you. Evening, film noir, smoke, atmosphere. Bob. Youre a young farmhand and e trade is your cow. Milk it. E trade is all about seizing opportunity. In new york state, we believe tomorrow starts today. All across t state, the economy is growing, with creative new business incentives, the lowest taxes in decades, and new infrastructure for a new generation attracting the talent and companies of tomorrow. Like in rochester, with worldclass botox. And in buffalo, where medicine meets the future. Let us help grow your companys tomorrow today at business. Ny. Gov great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Apple weighing heavily on the dow after the price target cut to 130 from 141. The Firm Maintains its buy rating. They said the pace of iphone upgrades is slowing more than expected. Tim, i feel like we sort of knew this. In fact, i think the march quarter is not going to be a good number. I think units will be down 10 to 15 . The upgrade cycle is look, i think were getting in a place where well continue to have a lot of buzz around new upgrades. I would dip in my wallet and pay 800 bucks really . It will go up during the show at some point. Its a time i think actually you look at whats going on with the valuation, whats going on with the pipeline, which is going to be more about upgrades. I wouldnt run too far. Look, its a proxy for the tape. We ran up against the 200 today. A very important level for the stock, around 111. I think that is the reason it pulled back. Ill be upgrading as well. I think you have enough with this upgrade and get off the fence. As far as tradingwise, tim just spoke to it. 106 to 110. Those are your balance levels. I do believe it goes higher from here. Im still in the name. Peter lynch on the desk. You know, 106 level is the level i mentioned a couple of weeks ago that i wanted to see it close above, which we got. Now what im looking for is that level to hold. Its a question of, what the market does versus what apple does. But if we get that level to hold, then we might be tempted to buy some of that. Are you excited about the curved glass or all that . All of those things are so exciting to me. What do they call these things . The ipad. Theyre going to be popular. No question. Its very heavy. Its very sturdy. I want to show america what i use here. Those are the letters you dont use. That i get mad at. Your apple trade . This is how i think you trade it. If it rallies into earnings, you fade. If you sell off, i think you buy. It sounds simplistic. Given the move that the stock has had, thats the way you play it. 141 down to 130. The stock is at 108. This is what gets me so angry about wall street. Everybody wants to blame it on a price target ratcheted down. The stock is way below that now, its so stupid. It sounds like to me youve got 22 off to the upside. Who cares if its less upside. 20 . Thats me without an abacus right now. Youre pretty good without it. Exactly. Good job. Not bad. Leave the abacus at home. Will a man pull out of his hedge fund . What has him heading for the exits. Im melissa lee, and youre watching fast money on cnbc. Heres what else is coming up on fast. So what do we do . Thats what pfizer investors are asking. Now that its big play for aller gen is busted. Meg terrell with a special report. Barclay said the new American Home has changed forever. Forever, ever, ever. Yes, forever. And there are several stocks that are poised to cash in. The names when fast money returns. But that is changing. At temenos, with the microsoft cloud, we can enable a banker to travel to the most remote locations with nothing but a phone and a tablet. Everywhere where theres a phone, you have a bank. Now a person is able to start a business, and employ somebody for the first time. The microsoft cloud helped us to bring banking to ten Million People in just two years. Its transforming our world. My dad gave me you know. Ares, he ran that company. I get it. But you know i think you own too much. Gotta manage your risk. An honest opinion is how edward jones makes sense of investing. Im in charge of it all. Business expenses, so ive been snapping photos of my receipts and keeping track of them in quickbooks. Now im on top of my expenses, and my bees. Best 68,000 employees ever. Thats how we own it. This cit added this other level of clean to it. It just kinda like wiped everything clean. My teeth are glowing. They are so white. I actually really like the two steps. Everytime i use this together it felt like leaving the dentists office. Crest hd, 6x cleaning, 6x whitening. I would switch to crest hd over what i was using before. [engine revs] [engine revving] the allnew audi a4 is here. Money. Pfizer is flying solo of the biggest planned merger in history fell apart yesterday. Its time for muchneeded stock therapy with the one and only reporter, meg terrell. Pfizer in reference to your very entertaining segment last night is probably going to Start Playing the dating game. Theyve got a lot of cash. One of the things people are talking about with pfizer now that theyre not going through with the allergen deal, of course, they could split the business into two parts. Theyre expected now to return to their original timeline for making that decision by the end of this year. And investors are really cheering this. If you look at the two business units, they talk about an established product and innovative product. The established one is older, more Slower Growth product. Obviously the beta one is newer. You can see the innovative product unit which includes a lot of their cancer drugs, Consumer Products, is bigger by revenue. If you look at eps, the established product business is more profitable. People are saying pfizer probably needs to do a deal in the innovative product unit if theyre going to split up. And so of course, the speculation is running rampant who could they buy. A lot of people attribute yesterdays big gain in the ibb to both what pfizer may buy and, of course, we talked yesterday with allergen. If you look at some of the names, jpmorgan, and isi, metavision insight, cancer companies, bristolmyers didnt make it to the screen here, and a Rare Diseases company, these are the kind of names that people, analysts and investors are floating around. What are the names people dont want pfizer to buy . Its interesting. This is from mark shownbaums notes. You can argue all three of these would be potential inversions. Theres probably Different Reasons why people dont want pfizer to buy valiant. But could pfizer still seek to do an inversion by going back to the british drawing board. And people dont want them to do that apparently. Really, the reason why the pfizerallergen deal got stripped is because of the allergen deal on the time frame. Glaxosmithkline hasnt done such a huge volume of deals. They are still big enough. That could be an option. But it doesnt sound like investors want them to try again. We dont have our white boards. Oh, we dont . That was so much fun last night. It was. Meg probably told you that, it would probably be a 120 billion deal, or thereabouts, pfizer to do Something Like that. Which they probably could pull off, by the way. But im not certain they would go that route. I think some of the smaller oncology names make sense. Because it becomes very binary. They bought American Home products for about 65, 70 billion a few years ago. The reason they did it is because they screwed up when they sold their Home Builders<\/a> were under pressure. So i added to that position based on the negative headlines in phm. As far as the s p, 50 handles up or down. Until we break 200 a day, i think you have to stay with your longs. If you have compelling longs that you want to get long, i have longer disney under pressure. I stay with my apple. If there are things that you really need to buy, then add to it. But until we jump out of this range, you stay with whats working. We remain in a trading range when we have extreme moves in other asset classes. The yen reaching the highest level, and the tenyear treasury yields. Tenyear treasury down now. We have inflation running, lets call it 1. 5 . Take the inflation minus the 1. 7 yield on the treasury, you get a 0. 2 gdp. Nothings changed. I totally disagree with chtim tt china has completely stabilized. There are still outflows from the country. Weve made new lows back in february. I think this is simply a rally in a bear market. So by the way, china had currency numbers out last night. In fact, fx reserves increased month over month. Well, no, but only valuation adjustment. They sold 37 billion. Thats a valuation adjustment. For people seeing 80 to 100 billion outflow in china, that was a reason for concern. Its nowhere near the same environment. It was 37 billion last month. Youve been saying its going to 100, 110, the chinese yuan is in a very different situation. With the dollar going sideways, unless you think the dollars going back to 110, i think china is actually in a place where were in a sideways chinese market. Its been difficult not leading that charge. What worries me, the bond market is incredibly strong. The transports which led us to the upside january 20th have now been quietly going down since the middle of march. Russell underperforming as well. Gold a bid for quite some time. The financials cant get out of their way. They had a horrendous day today, led by Deutsche Bank<\/a> which has quietly gone from a 20 handle to 15 handle within whisper of the low it made a couple of months ago. My level in the s p is where i thought it would stop at in the first place 2025, that should be support. Where are we in that choppy Trading Market<\/a> with todays action . I think were going lower. Okay. But i dont think were going dramatically lower. China to me ultimately the market going down today is not a reason to say its going significantly further down. Thats what im saying. Im being consistent with my views. I think thats all i want to say. I think theres enough space for all of us to look stupid, or to look like geniuses. Its trading range. For me you also have to have lines in the sand. Guy says 20 25, tomato, tomato. Have your entry or your exit if youre going to stay long. Within this sort of market, what shall the areas youre looking at . I think it was monday, i mix up my days, but he said ipp would trade up to and we talked about failing at 285. Take a look at where it traded up to today and where it closed on the day. Very interesting. So i think you avoid those, but i still think theres headline risk. The gold market for maefr reason i cant identify continues to want to go higher. I think bonds go higher as well. The health care sector, i think is a place where you actually have an opportunity here. In a world where i dont think markets are going down, you should be abandoning all stocks. I actually think health care with all the obvious reasons has been oversold after being in a crowded trade. I think it has to continue to be a relatively crowded trade and i dont think its as crowded. I think it will be very defensive for most of this year. A place where i actually think you have fundamentals that line up with the market that has a lot of disconnect. People will be reaching for food stocks, for staples, and those are things that i would gravitate to. Executive directory of u. S. Usb, julian, welcome to the show. You say the vic should be a 20. The s p 500 should be around 1970, which is lower from where we are. What does that path look like to these points . That path looks like sort of torture over the next several weeks. Okay. Basically because we have to remind ourselves that this is a different environment than the last 3 1 2 years. This is a high volatility environment. You had the rubber band stretched to the down side in february. You had massive capitulation. And, you know, were happy to see it. We think the markets will finish higher by the end of the year. In fact, when the vics trade back down to 14 where it was yesterday, and weve essentially gone up in a straight line, at the same time the expectations have gone from 2 growth to the gdp at 4 . Theres a disconnect that we think there needs to be some discomfort felt. After todays session, we see we can go down to 1970, but you still say the markets will finish higher for the year. Thats right. Thats right. Basically, this is one of those stories where the investors are finding their footing. The economy is finding its footing. And its very clear that the fed is going to err on the side of dovishness, so we dont have to worry about the rates running away on us. When the stocks are trading in the neighborhood of 16 or 17 times, and theres Earnings Growth<\/a> potential for 2017, thats a good multiple against the julian, rates running away from us to the upside. It seems just as bad as they ratchet back the other way. The u. S. Doesnt appear to be going higher anytime soon. Is that equally as bad . Thats definitely an issue. I think that is part of why investors are so perturbed by whats happened in the yen. It wasnt supposed to work that way. Negative rates were supposed to weaken the currency, but what were finding out is that basically whether its cash under the mattresses or what have you, it strengthens the currency, and thats been a reaction thats happened in japan over the course of years. And the outcome is definitely in question. Which julian is one of the reasons negative Interest Rates<\/a> in japan shouldnt have worked anyway. Its a savings economy. It probably wouldnt work in the same way it would in other economies. But if rates are negative around the world, shouldnt this put an upward bias on equities, especially those delivering an earnings yield significantly better on raa relative basis fr where you have been in a long, long time . It should. But the first part of the equation, the stoking of a b more inflation. Gold is telling us that that is starting to be an issue. In this environment, thats a positive if we get resumed economic growth. But in this waitandsee type of attitude is the pullback on health care. Thats a sector thats going to grow its earnings in the first quarter, which is a very dicey quarter coming up next week. But also, throughout the year, and its been left for dead if you will, given politics, given the volatility in spec pharma, and that you had a major merger break, we think those are cathartic events and health care will work here. The s p 500 sectors, which do you see having the most risk on the path to 1970 . Actually, this is probably counterintuitive, but if you look at it, both cyclicals and defensive stocks got bid up in this environment of the last three months. And that doesnt really make sense. Actually, for us, if you look at it, Consumer Staples<\/a> are trading at the highest multiples of all time. And thats almost potentially a defensiveness bubble. So if we see news turn around and news get better over the next several weeks, and all of a sudden, perhaps japan intervenes, what have you, the tenyear yield starts heading back up, that sector is very vulnerable in our view. Julian, thanks for coming by. Thank you. I like that defensiveness bubble. Whats interesting, look at the utility sector. That has been a huge beneficiary, where people are coming in and buying yield. But over this week, youve seen a reversal of that. Youve seen reversal of at t, in verizon. Some people that i talked to from the currency side of it actually talked about it as being an unwind due to the japanese yen. I didnt know if it was going to be that in agreement, but those defensive trades are looking vulnerable right now. I dont think so. I dont either. I think you get one day theyre vulnerable, and some days theyre definitely where they usher in a lot of money. The chart looks like its in nose bleed territory, yet it keeps ratcheting up. You cant get the yield anywhere else. Theyll continue to grow. I think on the cyclical side, i think i would agree. What i was pointing out a month ago, or six weeks ago, is that i thought the transports were still relatively cheap to their history and they needed to balance. You cant make a huge argument for transports here. Back to, you know, i want to set something straight. When i mean victory laps, after three or four days of market pullback, were framing this as a bulls bears debate, and i dont think it is that. I dont think its a time for that. Its for saying which parts of the market are oversold. In some places even in emerging markets i think youve seen the worst. Ultimately i think were at a place where markets have a lot of discomfort ahead of themselves. At what point does coke enter that defensive bubble in your view . Do you still like it . As long as it stays above 44 1 2, 45, i think youre fine. It does feel like its breaking out. To steves point, it does feel like a stock people continue to pour money into. Coming up, whats next for pfizer . The name that could soon be on its shopping list. Barclay, an analyst behind the call when fast money returns. E trade is all about seizing opportunity. And id like to. Cut. So im gonna take this opportunity to direct. Thank you, well call you. Evening, film noir, smoke, atmosphere. Bob. Youre a young farmhand and e trade is your cow. Milk it. E trade is all about seizing opportunity. In new york state, we believe tomorrow starts today. All across t state, the economy is growing, with creative new business incentives, the lowest taxes in decades, and new infrastructure for a new generation attracting the talent and companies of tomorrow. Like in rochester, with worldclass botox. And in buffalo, where medicine meets the future. Let us help grow your companys tomorrow today at business. Ny. Gov great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet<\/a> installed on your schedule. Comcast business. Built for business. Apple weighing heavily on the dow after the price target cut to 130 from 141. The Firm Maintains<\/a> its buy rating. They said the pace of iphone upgrades is slowing more than expected. Tim, i feel like we sort of knew this. In fact, i think the march quarter is not going to be a good number. I think units will be down 10 to 15 . The upgrade cycle is look, i think were getting in a place where well continue to have a lot of buzz around new upgrades. I would dip in my wallet and pay 800 bucks really . It will go up during the show at some point. Its a time i think actually you look at whats going on with the valuation, whats going on with the pipeline, which is going to be more about upgrades. I wouldnt run too far. Look, its a proxy for the tape. We ran up against the 200 today. A very important level for the stock, around 111. I think that is the reason it pulled back. Ill be upgrading as well. I think you have enough with this upgrade and get off the fence. As far as tradingwise, tim just spoke to it. 106 to 110. Those are your balance levels. I do believe it goes higher from here. Im still in the name. Peter lynch on the desk. You know, 106 level is the level i mentioned a couple of weeks ago that i wanted to see it close above, which we got. Now what im looking for is that level to hold. Its a question of, what the market does versus what apple does. But if we get that level to hold, then we might be tempted to buy some of that. Are you excited about the curved glass or all that . All of those things are so exciting to me. What do they call these things . The ipad. Theyre going to be popular. No question. Its very heavy. Its very sturdy. I want to show america what i use here. Those are the letters you dont use. That i get mad at. Your apple trade . This is how i think you trade it. If it rallies into earnings, you fade. If you sell off, i think you buy. It sounds simplistic. Given the move that the stock has had, thats the way you play it. 141 down to 130. The stock is at 108. This is what gets me so angry about wall street. Everybody wants to blame it on a price target ratcheted down. The stock is way below that now, its so stupid. It sounds like to me youve got 22 off to the upside. Who cares if its less upside. 20 . Thats me without an abacus right now. Youre pretty good without it. Exactly. Good job. Not bad. Leave the abacus at home. Will a man pull out of his hedge fund . What has him heading for the exits. Im melissa lee, and youre watching fast money on cnbc. Heres what else is coming up on fast. So what do we do . Thats what pfizer investors are asking. Now that its big play for aller gen is busted. Meg terrell with a special report. Barclay said the new American Home<\/a> has changed forever. Forever, ever, ever. Yes, forever. And there are several stocks that are poised to cash in. The names when fast money returns. But that is changing. At temenos, with the microsoft cloud, we can enable a banker to travel to the most remote locations with nothing but a phone and a tablet. Everywhere where theres a phone, you have a bank. Now a person is able to start a business, and employ somebody for the first time. The microsoft cloud helped us to bring banking to ten Million People<\/a> in just two years. Its transforming our world. My dad gave me you know. Ares, he ran that company. I get it. But you know i think you own too much. Gotta manage your risk. An honest opinion is how edward jones makes sense of investing. Im in charge of it all. Business expenses, so ive been snapping photos of my receipts and keeping track of them in quickbooks. Now im on top of my expenses, and my bees. Best 68,000 employees ever. Thats how we own it. This cit added this other level of clean to it. It just kinda like wiped everything clean. My teeth are glowing. They are so white. I actually really like the two steps. Everytime i use this together it felt like leaving the dentists office. Crest hd, 6x cleaning, 6x whitening. I would switch to crest hd over what i was using before. [engine revs] [engine revving] the allnew audi a4 is here. Money. Pfizer is flying solo of the biggest planned merger in history fell apart yesterday. Its time for muchneeded stock therapy with the one and only reporter, meg terrell. Pfizer in reference to your very entertaining segment last night is probably going to Start Playing<\/a> the dating game. Theyve got a lot of cash. One of the things people are talking about with pfizer now that theyre not going through with the allergen deal, of course, they could split the business into two parts. Theyre expected now to return to their original timeline for making that decision by the end of this year. And investors are really cheering this. If you look at the two business units, they talk about an established product and innovative product. The established one is older, more Slower Growth<\/a> product. Obviously the beta one is newer. You can see the innovative product unit which includes a lot of their cancer drugs, Consumer Products<\/a>, is bigger by revenue. If you look at eps, the established product business is more profitable. People are saying pfizer probably needs to do a deal in the innovative product unit if theyre going to split up. And so of course, the speculation is running rampant who could they buy. A lot of people attribute yesterdays big gain in the ibb to both what pfizer may buy and, of course, we talked yesterday with allergen. If you look at some of the names, jpmorgan, and isi, metavision insight, cancer companies, bristolmyers didnt make it to the screen here, and a Rare Diseases<\/a> company, these are the kind of names that people, analysts and investors are floating around. What are the names people dont want pfizer to buy . Its interesting. This is from mark shownbaums notes. You can argue all three of these would be potential inversions. Theres probably Different Reasons<\/a> why people dont want pfizer to buy valiant. But could pfizer still seek to do an inversion by going back to the british drawing board. And people dont want them to do that apparently. Really, the reason why the pfizerallergen deal got stripped is because of the allergen deal on the time frame. Glaxosmithkline hasnt done such a huge volume of deals. They are still big enough. That could be an option. But it doesnt sound like investors want them to try again. We dont have our white boards. Oh, we dont . That was so much fun last night. It was. Meg probably told you that, it would probably be a 120 billion deal, or thereabouts, pfizer to do Something Like<\/a> that. Which they probably could pull off, by the way. But im not certain they would go that route. I think some of the smaller oncology names make sense. Because it becomes very binary. They bought American Home<\/a> products for about 65, 70 billion a few years ago. The reason they did it is because they screwed up when they sold their Consumer Products<\/a> business to j j about eight years ago. I dont think theyll make the same type of mistake in terms of dollar signs. If they bought another company at this point, is it a foregone conclusion theyll buy in order to split to make sure the businesses of are of hefty enough size . People seem to be leaning toward they will split, but need to be up in the innovative products. They bought hosspira, last year or the year before, and so people are thinking they need to even it out on the innovative side. Innovation is under fire for pricing. Theyre looking at alternatives basically. I would say that in this whole space, people have to start pulling back a little bit. Because the risk is to the down side. If they start to do another deal with pfizer, if pfizer started to throw something at the wall now, and somehow it gets risk to pfizerstock price . Exactly. I think you have to go back to the safety play. A 3. 6 yield. Ive been long it for what seems like forever. I think you have to get your sea legs back and maybe buy Small Companies<\/a> that we dont know about right now, that dont show up on radar before they take out a big chunk. I kind of disagree with that. I think the spinoff of the established Global Products<\/a> business is a catalyst. I also put my Julian Emanuel<\/a> hat, our last guest, thats much better than me, but i would say pharma is oversold right now because of the political risk. Everybody knows the political risk. I think theyre in the price. How could you know its in the price, though . We have so much ahead of us. And the average joe can relate to drug pricing right now better than anything thats out there. Everything youre saying, everybody knows. These should be overweights in this environment. Theyre underweights. I think its to your advantage right now. What everybodys talked about is why this whole trade, health care, biotech is so complex right now. Add that on to the complexity of the market, and i think its a very difficult place to be here. Ive said the biotech index on rallies, is a sell into the election because of the political risk. I get it, yeah, you might we know about it, but its still i guess its a known unknown, to borrow a phrase from years past. Thank you. Thank you. Barclay sounding the alarm on housing, saying theres a new reality happening in the space. It could mean big news for several stocks. The analyst behind that call joins us next. The best performing stock in the s p 500 today. What is tim seymour so bummed out . He will explain when fast money returns. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats<\/a> on the rise, marys data could be under attack. With the help of the at t network, a network that senses and mitigates Cyber Threats<\/a>, their Critical Data<\/a> is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet<\/a> installed on your schedule. Comcast business. Built for business. The dow falling 174 points. The biggest drop in a month and a half. The s p 500 and nasdaq both fell 1 . The s p 500 erasing gains for the year. Now slightly negative by a point or two for 2016. Financials, they were the worst performing sector of the day. Heres whats coming up in the second half of fast money. Now one of a client is pulled out of the fund. How much did he pull . Plus, were waiting fed chair janet yellen and officials expected to speak here in new york. But first, we start off with the housing market. A fascinating report today from barclay says homes in america is coming to an end. That could be a windfall for a number of stocks in the group. Steven kim joins us here on set. Steven, great to have you with us. Thanks for having me. I thought everybody in the United States<\/a> wanted a huge house with a huge lawn. Yeah. Well, it looked like we did for a long time. Id say about 35 years. The mcmansion was really a term that waskind in the late 80s. We did just go through the biggest housing downturn the country has seen. Theres two major drivers to this change. One of them is that we are seeing a wave of baby boomers termed empty nesters now looking to downsize. At the same time at the other end of the spectrum, you have millennials who have held off buying, and now that theyre buying theyre actually skipping over the starter homes in the sticks and willing to pay a little more, get a little less footage, but with more amenities. The results are that you have the two biggest demographic groups in the country converging on the same kind of product. Smaller, denser, closer into the city kind of product. Theres not that much out there. How to connect this to a trade. Who builds these homes . Who benefits . Its important to recognize theres a change in what people want. The Housing Stock<\/a> can only change 1 a year because of new construction, right . The difference between what people want and whats available to be bought means youre going to have to make that up with renovation work. We think remodeling plays are going to do very well in this environment. Who is doing the renovations . Its a lot of jobbers and small guys in your neighbor hood. By i think the best way to play is the home centers, as well as the companies that make the products like cabinets and flooring and countertops. Does it matter what the economy is doing at this point . Or does it only matter about jobs and Interest Rates<\/a> . Certainly where we are in the cycle certainly matters. I think one of the most important things to recognize about remodeling spend is its most tied to the home price depreciation thats already happened over the last three years. And so as a result of that, because that news is good, we think this is going to have some legs. Also, this kind of societal shift doesnt happen often, and it will have some momentum for a while we think. We need the forward, the next years, the next three years, to also appreciate in order for the trend to hold . Or how long does the past three years hold for somebody to decide, ill pull the trigger and change my floor and upgrade . We think it actually has already begun. Thats the good news here. Most of the statistics we cover in our report, you can actually see theyve already begun to turn. This isnt something were saying is going to happen some day, its already happening now. We think in terms of future spend, we think that home prices are going to do well. One other thought i would put in your head is if we have a change in the way people in what people want to buy, thats going to show up as a premium that people are willing to pay for new homes over existing homes. Like home prices. So therefore, we think the builders are going to benefit from this, too. Steven, thank you for coming by. Steven kim from barclays. I think thats interesting. The renovation trade. The one thing that i would caution against is if you look at some of the Home Builders<\/a>, their Business Plan<\/a> is to benefit from the urban sprawl thats been going on. But that has to change. Thats why home depot and lowes in the world look good. Me, am i in the Home Builders<\/a> . I would take profits in exposure to the oil patch, big runup here. Thats how i play this. You jt added to kb homes . I did. You have the founder whos trying to kick out the ceo. But what theyve been accused of, what the ceo has been accused of is not being aggressive enough on the acquiring side. Im long both kb homes and polte. The Housing Stock<\/a> is something that will continue on. Sherwin williams and lowes and home depot, they are expanding possibly better. The keys about home depot and lowes, theyre not adding that many more stores. Youre seeing pressure upwards on their retail space. Theyre selling more per square foot. Big ticket items at home depot up 12 year over year. Appliances, all these do it yourself kits for the home. 19 times earnings for home depot. Literally, unsuccessfully, met an alltime high on monday. I think the price target could you pressure wash my house this weekend . No doubt. I like doing that. But it needs to be a tad warmer. Because we get a lot of blowback spray. For your own comfort it needs to be warmer. The gorton fisherman, right . The yellow outfit. You need to show up saturday. See you saturday. From the home to the mall, weve got a news alert. Seema mody is in the newsroom with the story. Gap shares taking a deep dive after hours. Reporting weaker than expected sales in march. Banana, old navy and gap global reporting a big slide in sales. More trouble ahead. The Company Warning<\/a> theyre entering april with more inventory than planned. Something that they expect will pressure Gross Margins<\/a> in their next fiscal quarter. Youre looking at the stock down about 8. 6 after hours, melissa. All right. Thank you very much, seema mody. You cannot buy one of those yellow outfits at the gap. The banana republic, you would think. Down 14 . Disaster. Was it sit tron a few weeks ago . I think they said the gap was irrelevant. I think that was the word they used. Correct me if im wrong. A lot of things theyve been right on is gap thats one of them. Every few weeks gap comes out with terrible sales. Weve been doing it for several years now. It doesnt seem like theyre going to turn around. Whats most striking is old navy used to be the outperformer, its no longer outperforming at all. I would be concerned actually with this report. Still ahead, more bad news for ackman. We hear from an investor who manages 16 billion, about why he just pulled millions from Pershing Square<\/a> capital. Right after the break. A bet gone wrong. Sitting at this desk tonight, making a wrong call on one of the casino stocks. We hold his feet to the fire right after the break. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Showing off his sensitive side yesterday. Despite his colorful comments, the stock surging nearly 12 today. Hes physically talking about a new development which he said everybody will want to enter because its so luxurious and grand. And so rich people will go there, poor people will go there, everybody will love to go there. Yeah. Lets just hope it was taken out of context or maybe hes running for president next time, im not sure. Theres no way you could take that out of context. Do rich people want to be as tan as he is . A sign of affluence, i guess. Very swarthy. I think what he said, to guys point, he said it. He does have good color, though. Who has better color, him or guy . The same color, how could you tell . Tell you what, he was stating the obvious. Aspirational. Look at that. That is unbelievable. See how i did that . I went right to las vegas and back. Amazing. Fantastic. All right. Lets go back to the trade here. I shorted Tuesday Morning<\/a> around 94 bucks. My view was actually going into earnings, we had already gotten the guidance on the numbers. I think its expensive relative to its history. I think the stock is clearly there was reason for it to have rallied. Its overreacted. I feel very good about the stop at 108. Again, for a stock this volatile, folks, you dont put a 3 or 5 or 10 stop on it. Right up to a key level. There was good news to take it up. The news on the Las Vegas Resort<\/a> is something thats exciting. But you know what, great, lets see what happens. It could cost a lot of money. Think of the times weve been waiting for these guys to open a new casino. Theres been overruns. If i get stopped out, i get stopped out. I also happen to be long impal against this. Real quick, by the way, did trade 85 3 4 yesterday. It did go straight down. Three times normal volume. If this thing gap opens lower tomorrow, dont be a hero and try to buy this thing. I would actually be looking to do more what timmys doing to sell into weakness. A huge run. Valuations are stretched. Technically a gap open lower wont be good. Turning now to the pain being felt across the hedge fund community. A very rough year for some of the smartest money around. Our next guest is reducing his Hedge Fund Portfolio<\/a> by over 1 billion. Yet another major blow to some of the greatest hedgies around. Mark, great to have you with us. Thanks for having me, melissa. I do want to point go ahead. I want to point out one thing, that you mentioned a couple times one man. Yet were a nineperson board. And a lot of times we disagree on things. In this instance it was a unanimous decision. And we have a pretty significant responsibility here. Theres over 130,000 workers and retired folks who depend on our fund. Go ahead. Thats why were so interested in this move that your team decided to go ahead with. Because from what ive read as to why youre doing this, returns have been terrible for one. Your hedge fund is basically the middle man, youre paying fees for lack of returns at this point. And you can actually follow what they do, because everything they do is being made public. Why now, though . Because this has been the case for a while. Right. Well, the our board had a pretty significant cngeover last year. And i was elected chair in september. Weve been taking some actions. We looked at our asset allocation. Probably the most significant move we made is we looked at the Hedge Fund Category<\/a> where we had 10 of the assets allocated. Over the last three years we paid hedge funds 180 million. And their performance was before fees, was actually worse than a balanced index fund which we can do for free. So it ended up being a fairly easy decision. We moved we ended up moving the money, you know, to sort of maintain our kind of current volatility levels. We moved it to fixed income which is historically that funds like ours have used to dampen volatility and it works just fine. Do you think that Pension Funds<\/a> have moved out too far on the risk spectrum . It was not too long ago you guys were looking at hedge funds and private equity for that matter, with some Pension Funds<\/a> out there even going so far as being part of private equity deals. Did you move too far out on the spectrum . Do you feel like the pendulum is swinging the other way at this point . The irony here, though, is, you know, maybe 15 years ago hedge funds were, you know, really went for returns. And were paid, you know, the 2 20 to do that. Over the last ten years, really, the pitch has been the volatility dampener where you actually get equitylike returns with lower volatility. All that ends up happening is theres money sort of parked in cash, and they go long and short. And sort of accomplish whatever they accomplish there. Then you end up with a net long position of 56 . And they just havent been doing any better than an index fund. Which we could get for free. As far as Pension Funds<\/a> generally going too far out in the risk spectrum, you know, i dont suspect so. The endowments have a completely different model. They have way more assets allocated to things like private equity and, you know, so i thats not really my view. I want to get some of the individual hedge funds from which you pulled funds. Big ackmans square is one of half a dozen or so funds where you pulled money. When you look at ackman and his portfolio, does it shock you that your pension was an investor in the first place given his concentrated positions . What would be the message today as to why you pulled the money out . There was nothing wrong with us being invested in Pershing Square<\/a> and active investors. I kind of appreciate what the activist investors do. You know, they get on these boards and i think they really make positive change. But we get the benefits of that through our direct equity investments. If we choose to concentrate in our portfolio on gem electric or whomever, valiant, you know, we can do that ourselves. We can pay a basis point to state street, get that done. We dont need this 220 structure in between our fund and the assets. Right. Marc, were going to leave it there. Thanks so much for joining us. We appreciate your viewpoint. Marc levine. I think its a good point, we talk about these filings all the time. We know what the guys are doing. Sometimes they come on at cnbc, talking at conferences on positions theyre putting on. You at home, you on the set, you can do that, too. No way. No advantage to being in a fund . You cant tell me that someone can suddenly say, im going to ride along with these activists. Theyre not doing the work on the companies. Marcs pension may be a very sophisticated place, i assume it is. They have a lot of people that can do the analytical work. A lot of institutions are not equipped to play equities just because you can play an index fund because you think its a place to play. I think thats very dangerous. A lot of guys are closet indexing. These guys are open indexing. I think the takeaway is, that that 2 20 model in this type of environment is broken. You need people to incentivize to get back into that model. Its not going to be 2 10. I dont think it is right now. In fact, im sure its not. Well, i you know, theres two things here. One, can you replicate these strategies at home. And i think with the advent of etfs, you can replicate a lot of Hedge Fund Strategies<\/a> at home for cheaper. You know, you can go trade currencies via the etfs there. You can trade bonds via tlt. Thats something you cant do 10, 15 years ago. In terms of whether the hedge fund model is broken, i think theres a certain amount of people that can earn those type of fees. Not everybody can hit a 100mileperhour fastball, but some people can, so you want to stick with those folks. You touched on something interesting. In terms of going up the risk curve, ten years ago i dont think any of the Pension Funds<\/a> ever heard of somebody called bill ackman. This is another unintended consequence of our fed, this Interest Rate<\/a> environment has forced people to be in things they shouldnt be in. Gold is about to skyrocket by another 10 in a little over a month, well take you behind the trade. A live shot of an event in new york where fed chair janet yellen is expected to meet with former fed chiefs. The pursuit of healthier. It begins from the second were born. Because, healthier doesnt happen all by itself. It needs to be earned every day. Using wellness to keep away illness. And believing a single life can be made better by millions of others. As a Health Services<\/a> and Innovation Company<\/a> optum powers modern healthcare by connecting every part of it. So while the world keeps searching for healthier were here to make healthier happen. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet<\/a> installed on your schedule. Comcast business. Built for business. Lets turn to gold. The gold etf is on a tear of 17 this year. Breaking down the trade. Hey, mike. So we saw two times the average daily call volume in gld. The gold etf. I think this trader thinks we need a bigger chart than this one. The reason was one of the earliest trades we saw was july 125 call. That would put gld over here. They spent 2. 29 to buy 10,000 of those. A bullish bet that it will be up 10 . Given how much it has moved, just since january, just under 17 , you can see why risking just about 2 of the underlying is probably the smartest way to make your bullish bets here. Do you think the move in gold could be that big . I do. Gold is one of those commodities that youre actually seeing an awful lot of demand for. And we know the supply is fixed. Youre seeing buying from china and russia, two of the largest buyers over the last year actually. Look at the inflation picture. If you look at t. I. P. , which is the inflation protect securities, theyre expecting inflation coming in the future. You have a demand set there. You have an uptrend. I still like gold. Once again, without the abacus, you just said gld is up 15 yeartodate. It outperforms 31. 43 . 46 . So if you do believe that the gold trade is still on, you play with the miners. Theyre torqued, either up or down. But i do actually, i am long gdx. I do think its flattening out here. Remember the other day, it was mike, texas or something, shangrila, talked about the buyer in the windfall. I dont know if he was buying the wind calls. But mike has been in its not mike. How do you know its not mike . Oh, aha i wish it was me. That is a new jacket hes wearing. And cowboy boots. Coming up on mad money tonight, looking to shine up your portfolio . Mark light, zales, jared and kay jewelers. Here at the Td Ameritrade<\/a> trader group, they work all the time. Sup jj, working hard . Working 24 7 on mobile trader, rated 1 trading app on the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of other competitors do on desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivatives pricing model, honey . Td ameritrade. Unlimited data from at t means you can stream it all. Like that Anthony Michael<\/a> hall movie where he fights with the girl. The one where he gets rejected by the girl. Even stream the one where he creates the girl. With unlimited data, you can stream all the Anthony Michael<\/a> hall movies you want. I wonder what hes up to these days maybe hes shopping in an at t store . Get unlimited data and your fourth line free when you have at t wireless and directv. Plus, get up to 650 in credits to help you switch. It is time for the final trade. Around the horn we go. Tim . I think you can push down in the iwm. Im short the russell. I said it three times on the show, kb homes. Im going to make four times the charm. It took a lock time to get to the spot. I think the risk is to the upside. Im going to use my abacus, five times, one more than grasso, i think you take profits on xl. You dont have to short it, but you take some profits in the utilities. Guy . Good show for wednesday night. I really enjoyed it. Tomorrows going to be big. Youve got elway on friday. Its going to be hot. Todays thursday. Good news. So regis. Im melissa lee. Well see you back here tomorrow at 5 00. Dont go anywhere, mad money with jim cramer starts right now. \\s my mission is simple to make you money. Im hire to level the Playing Field<\/a> for all investors. Theres always a bull market somewhere, and i promise to help you find it. Mad money starts now. Hey, im cramer. Welcome to mad money, welcome to cramerica. Other people want to make friends. Im trying to make you money. Call me or tweet mea meal jimcramer. You know whats amazing about this market . That it wasnt down even more. 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