Brutal day for stocks. The dow and s p having their worst day in a month. Concerns there could be a fed bombshell tomorrow in the form of the minutes. Home depot sold off hard, and you have to wonder, is the market saying this is as good as it gets. We kick it off with dan, whos been bearish. Ive been skeptical. To me, ill just say this. Im not actually bearish. The market has been banging around 2050. For it seems like weeks. When you look at the s p 500 in particular, i think its just above an important year term Technical Support level. Thats about 2037. Thats the april low. I think you have room down to 2000. Thats no reason to run for the hills if you think about it. Its just a couple of whoa listen, im of the mindset, not too different from last may, weve been banging it around. It will take something somewhat external or miscue by the fed to break us out of the range one way or the other. The miscue could be the fed could be out of the picture here. Look over the last week or so. Weve had oil rising and the stock market falling. Thats something thats different over the last several months. Look at what the fed can do. If theyre worried about inflation, they can raise rates. If they raise rates, then oil falls, the dollar goes higher and we end right back in the situation we were earlier this year. I think one of the pillars of the huge bull market is now out of the picture. If i look at oil, im having understanding where this thing will fall so far out of bet. If you believe the fed is going to jump in aggressively, look out oil, look out a lot of things. Who im not saying they are. They cant do one or the other. Therefore, oil, first of all, by the way, thats a vshaped bottom. 85 , and 85 sessions, oil has come back and rocketed back. Its going to 50, it could go to 60. Oils not going anywhere. Oil has gone straight up. It can certainly correct. If we say the fed is not in the picture, i would say the other asset factors would be more or less fine. What happened today. Because the common theme today is that the people were selling the winners hard. Thats why we brought home depot up as an example today. The stocks didnt have a chance from the start of the session. Stock was north of 140, i believe, just after they reported. We never saw that obviously during the regular session. What is it saying . Its saying what home depot said, this is going to be our best quarter. The commensurate rate was commen commensurate with the beat. I think they can go down a couple more dollars from here. I think the fed is absolutely on the table. I sort of agree with tim, even if the dollar rallies, i dont think it will derail this crude move, which ive been wrong about. But its been extraordinarily powerful. But fed in the picture, raising into what i think is an earnings session is not good. Do you think theyll do that . Yes. The data today could give them the impetus to make a move. Thats what i think. So thats to me, thats why you saw the market fall apart today. As inflation goes higher, not really high, lets be clear about this, but in the feds picture, theyve hit their unemployment target, theyve hit their inflation target. Theyre at a point where they can raise. If you think about that, that will make the dollar go higher and we end up back the other way. The other side of the coin, the fed cant really let the dollar fall. You get the oil going through the roof. Your 60 oil is going to look really good if the fed lets this dollar weaken. We talk a lot about oil but lets talk about gas at the pump. Its up a lot just since 2016. We never got the tailwind from lower oil. We just didnt see it. It never really happened. At some point i have a feeling it could become a headwind in the very near future. Especially when you consider i know retail sales were okay. Think about the jobless data we got in april. Think about some of the retail data weve had on the individual company level. I think its really how do you explain doesnt help on the way down, hurts on the way up. By the way, if its going up, heres what i say to brians comment, so many cries for the recession, maybe not on this desk, but so many cries for recession. Its almost technically impossible for this to happen in 2016. This Industrial Production number showed that the second and third quarters over the last couple of years have been much, much stronger. And they probably will be. Are you buying on the selloff . Yes. First of all, the defenses are going to continue to be defensive. Today was the first day, at least the beginning of a pullback in a handful of the names. General mills, kelloggs, clorox, high bid traders that will trade at a premium. Through the 50day for the First Time Since dec 31, its not going to stop in one day. You have to watch about the breakouts. Did you see kraft today . They had this magnificent breakout a couple of weeks ago and today it just got destroyed. That failed breakout, thats something you have to keep an eye out for some of the market leaders. Home depot trying to do the same thing. Couldnt break out. I would be careful on some of those. I think investors are starting to get very conscientious about valuation. What should be on your Shopping List . Still the bond market, without question. I dont care what the dollar is going to do at this point, the gold market has been telling you something and continues to tell you something. Gdx is up 100 since the low in january. I also believe, and you had jeff gunlock on talking about tenyear rates below 1 , i dont know about that, but i think the tlt is going a lot higher from here. Gold, its completely ignoring the dollar. Tlt, im a little up in the air. I dont have a position in it, because im not a hundred percent sure the feds going to raise the rates. What should we avoid . Stock market. I think you avoid financials. Weve had discussions on how financials do well. But i think the yield curve was the flattest its been in nine years or something. Is that right . Thats crazy stuff. Its headed i think it continues to go, if not inverted at some point. Thats a good point. Were going to talk about extreme positioning later in the show. Is that some of the names the Consumer Staples are so crowded. Those are names that are not multiples. Theyre ones that could probably pull back a little bit as i said. Im talking about an amazon. Can i throw a stock in there . Paypal. Tomorrow they have their first Analyst Meeting since they were spun out of ebay. Why does facebook work so well, they are at the forefront of a secular shift. Paypal is a name like that. Theyll meet tomorrow. Thats a stock that could break out in the coming months. You want to have those sorts of dynamics that are going on there. To me, thats one thats very interesting growth at a reasonable price. Dan likes paypal. He likes something. Dan knows a lot. Despite the days selloff, the stocks could rally another 20 higher from here. Tony is chief market strategist. Specifically, tony, 15 to 20 in the next 6 to 12 months . What i really love to do, i love the conversation. What i really love to do is take all of our opinion out of it. Because thats just what it is. And look at what historically happens when both credit and market breadth go from being so terribly weak to so terribly strong. Were talking about oil potentially selling off and not being a tailwind but being a headwind. Were just back to where it was at the end of last year when it was a disaster. So you still have the positive influence of lower Interest Rates, lower energy expense, and you have this the only times that youve had such a negative tenweek rate of change on the moodys, remember the high yield debt was blowing up and it was going to bring us into recession, the yield fell so much in the first two months following that first two months of the year, the market is up on average median 21. 3 when thats happened over the last 25 years. Since actually since 1970. Never been negative six and 12 months later. I like to look at when you have these kind of reversals, it was historic. The decline, which i missed, but the reversal higher in the improvement in credit, and energy, and emerging currencies, that leads to higher prices over time. And thats really where were focused. It feels like there needs to be a catalyst to snap the investors into it. Because people are wringing their hands not really knowing they think fed rate hikes will equal the market volatility and step to the side. I think a lot of the fear now i went neutral in mid march. You had such a big rally. Like in the Canadian Dollar even, you pull back. But you have to buy that pullback. The catalyst in my opinion is when we get through june. You have opec on the 2nd, i believe. The fed meeting on the 14th, 15th. You have the 23rd, thats a big deal. If the uk leaves the eu, its a big deal. 15 to 20 rally in the s p. How do you wrap your head around valuation for the s p . Right now, my opinion, an earnings recession, 17 1 2 timesish. You have to ratchet that number up to the low 20s to get to that number. Unless youre in recession, you dont peak a bull market until you combine the operating earnings, pe and inflation, it gets to 22 . In the 1970s, when you had inflation at 14 , a market pe at 8, you got to 22. Now, you have a pe of 17 point lets say 18. I think you have multiple expansion in front of us with top line growth with better global economy. You just mentioned when bull markets top out. The last two times bull markets topped out in 2000 and 2007, fed funds were at 5 . Here we are just off the zero Interest Rate. Can you throw out all that data, everything you think about how you think bull markets top out . Its different this time. I put it in the note today. Its not different this time. Its never different. When i got in the business but it is different this time. In every cycle its different because of the leverage, the fed has to go lower for way longer. So i found a quote from Caroline Baum from bloomberg. She wrote pushing on a string when the fed went from 9 7 8 and stayed there for six months. You didnt have a v bottom in the fed rund rate. Actually used the term pushing on a string. Its not different. Thats the key here. Its just taking a lot longer. The catalyst for change isnt time, its the fed. Its more debt. What are you talking about . Thats the thing, tony. Think about how much sovereign debt around the world is in negative Interest Rates. Something is broken here. Why wouldnt you want to own equities in that environment . It should be. Because thats what the thats the bottom of the financial crisis. But you dont see somethings broken here . Let me ask you this. The only time you know that the fed is not working why have the stocks not made a new high . Were waiting for earnings. You have to have earnings. 1985, 1986, was the last time you had a nonrecession negative earnings environment. Six quarters in a row of negative earnings. Worse than you had now. Yet a 15 correction in the s p 500. And by june, from june of 86 to the peak in 87, you had 55 gain. But were talking about a completely different economic environment than the 80s and the 90s. The 90s started out so weak. You remember. The postsnl crisis. We had the internet boom. We had the technology boom. How about if the catalyst becomes monetary stimulus. The eurozone you had it at 5 in the 1990s and it went to three and stayed there for 16 months. So lets talk about the eurozone. You only know that the fed is pushing on a string in hindsight after youve gone into the next recession. Because its taken years each time since the 1970s, its taken more time. When you think about the eurozone, theyre buying corporate debt. The only thing thats left is buying the s p. I agree with you, this is going to end so badly. But were on the right side of it. Well, i dont i would agree with you five years ago. At the end of the day im saying theres Something Different going on in the market and the economy. Its been different going on for the last but you have to do you think theres a 15 to 20 rally in the next six months . No, i dont. And you dont . Thats the bottom line . A lot of the things that the last time i was on this show the stock market trading where its at, on the basis of bull history, were in a place here where actually i think you can actually say it could trade through the 22 . Because the world is awash in negative yield. How about if the eurozone, which is the leading Economic Indicators are, money supply year over year change in china is ramping. What if the surprise is to the upside and you get Economic Vitality and you get some ramp in earnings in the top line. Theres your multiple expansion. Theres your 15 to 20 . Unicorns can fly, too. Tony makes an select point. The best point hes made is nobody expects it to rally, not even me. I will assign probably a 20 probability in my mind to some kind of fomo rally. Fear of missing out if you get the thing to break out, wouldnt surprise me at all to see the thing go up 20 , just on fear. Thats a good guess right there. Good job, man. Good looking man. I cant wrap my head around the valuation i understand what tims saying. But its again, its inherently wrong to have 30 of all bonds in a negative yield right now. Up next, the wearables market continues to grow. Why are stocks in garments seeing big losses in the past year . Could this be a case of good product, bad stock . Citron pounding the table on cnbc. But get this, the stock surged. Well explain whats behind that move. Plus, the dean of valuation of the favorite growth stock has a major problem. Hell tell us why he thinks amazon should be trading at half its value when fast money returns. There are two things you shouldnt do after a kidney infection. Go skiing. And skip your meds. Good thing for me theres optum. With my optum pharmacy plan, they discovered my prescription wasnt filled when i left the hospital. They called to remind me about taking my antibiotics so i dont end up back in the er. And this run down the mountain. Lets keep between us. This is healthier, powered by optum. From health plans to providers to employers. We connect all parts of health care. Healthier is here. Welcome back to fast money. Valeant seeing big gains on the day. Citron reversing course on valeant and getting long on the stock. It got to a point, actually, i figured, im going to put my money where my mouth is. And i got 1 million check, cashiers check to the ms society. This is my money. This is not the money of hedge fund, or investors. Thats all i want them to do is test their drug. Just test your drug against the same synthetic that you bought to put on a shelf. I can tell you one thing, if valeant did what mallynnckroot is doing telling us that the company is basically making Great Strides in transforming itself into a Pharma Company thats consistently meeting or exceeding expectations. Dan . I would say that was a fascinating interview. Now he categorizes hes long in valeant for being so right for so long. I think its important for viewers out there to understand here, he also said hes long put. Hes defined his risk on that one. Doesnt see it going to 60. Obviously sounds very convicted. If you look at the chart, back in 2013, theres an air pocket down to about 40 bucks. To me, that one seems interesting. With all that Short Interest and sentiment so badly, i dont know how you at home play it. Im certainly not. Weve got power drills here. I know. Im never distracted. Ill say this, it is not a valeant bullish call at all. Its an indictment rather than than endorsement. It seems like it cant get much worse for valeant. This group has traded as a group for so long. Highly correlated. For him to say this is a pure trade its not quite a pure trade. This is not the place i would not do a pear trade. Investors really need to be careful about that. Again, as we look at the valeant, sum of the parts, this is where i think investors are grappling with do i have enough transparency in this balance sheet. If you do have a ball, go ahead and buy it. For me, of all the other things out there to buy, why would you buy valeant at this point in time. The risk is so unknown. It doesnt make any sense. Why would you buy equity over the debt. Its got a 10 billion equity market. At some point if they really cant kind of raise some cash through asset sales or i dont know. What im saying is, do the math. If youre a cap structure guy, you want to own that debt. The debt holders, at some point, lower, dont want to see that equity exist. If history is any indication, a stock about to hit a brandnew high in months. Im melissa lee and youre watching fast money here on cnbc. Heres what else is coming up on fast. If you thought that was extreme, wait until you find out what one group of stocks are doing. It will really blow your mind. Plus, this man, the deep of valuation says amazon shares should be half their value. What hes looking at that no one else is. Hell be here to explain when fast money returns. You both have a perfect driving record. Perfect. No tickets. No accidents. That is until one of you clips a food truck, ruining your perfect record. Yup. Now, you would think your Insurance Company would cut you some slack, right . No. Your insurance rates go through the roof. Your perfect record doesnt get you anything. Anything. Perfect for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claim centers are available to assist you 24 7. For a free quote, call Liberty Mutual at switch to Liberty Mutual and you could save up to 509 call today at see Car Insurance in a whole new light. Liberty mutual insurance. Welcome back to fast mon money. A news alert on donald trump. John . Melissa, a couple of things have happened with donald trump. First, hes filed a new personal Financial Disclosure with the federal election commission. The headline from that is hes reporting an annual income of 557 million. That is more than three times as much as the wall street journal estimated in a story a couple of days ago, what his annual income was. So thats significant. He reiterated that his net worth is more than 10 billion, which is, he said is larger than what it was over 10 billion a year ago. Secondly, hes given an interview with reuters in which he said some interesting things. Hes not an enemy of janet yellin. Reiterated hes a low Interest Rate guy. Said he would renegotiate the paris climate accords that president obama negotiated