News of a fatal car crash. Phil lebeau will join usins moments with all the deal on that and the International Monetary fund says its identified the most dangerous stock in the world. Well tell you what that one is and what has traders so they are vows. First, well start with another Third Straight day of gains. Dow ending higher by 235 points and the s p gained more than 1 on the day, but we were looking at the internals, and its pretty curious. Its defense thats leading the way, like telecom and utilities and staples. They are trading like Growth Stocks, so whats with that, guy adalai lama, what do you think . First of all, sue, thanks for filling in, yeomans work and great effort by you. Ive got to tell you, that melissa lee, dove clock. I used to have to run for blocks to get down to the New York Stock Exchange when traffic is back and the poor thing has been sitting there like sweating. She will be here in a second. The irony, sue, is last night i slipped on to the set about 20 seconds late for the second time in the nine and a half years that ive actually pulled this stunt. Melissa thought it was such a good move. She copied you. Probably got me by more than 20 seconds. She will be along in just a little bit. Thanks for being here, sue. Steve grasso has been here for a while in terms of telecoms and utilities and why they have been going higher so steve can speak to that. I think one of the biggest problems with this market though is that those names are outperforming to the upside. You take a look at verizon and you take a look at at t over the last month, month and a half. Two stocks going sideways for the last four years and magic over the last month and a half. They have both broken out to the upside in a significant way. Now, you can argue that maybe at t is reinventing themselves a little bit. Thats worth an argument. I would submit though people are chasing, is that a good sign. Well, it has been a good sign for a Broader Market and at some point i think valuation matters. Tim, weigh in on this. If you look at where weve stood sunday night going into monday morning. Right. It looks like we were really going to have a rough week and here we are doing pretty darn well and the Growth Stocks like facebook and google you say are not participating more in this rally. Does that worry you . Not necessarily. I mean, whats interesting is weve got this bifurcation where values are working. The stocks were talking about are not value countries so like the food stocks with the news on the monday lease hershey bid has put a continued bid into a part of the market that also has been very defensive, high dividendpaying consumer staples, food, stocks, beverages, et cetera. The value has been in some of the bombed out commodities plays and resource plays and even some of the industrials which some have caught a bit, but ultimately this is not a surprise when you consider whats going on with global yields. Everybody has been upset that the bond market has continued to rally or that the tenyear is still around 150, even though the stock market is back up to the highs. Why are we surprised by this . You know, to me this is where were supposed to be in this Current Central Bank environment. Do you agree, karen . You know, ive got to say im very confused by the markets reaction if you look at, you know, as weve said, weve made back almost all the way down and in fact there was a few days of upmarket in the preremain euphoria that there was, so im very surprises. In fact, yesterday i bought more puts and well see a lot more volatility and i cant imagine from this very big event that there was a very brief ripple and then thats it, and steve has been all over the utilities for so long and been so long on that trade. Its interesting that they are leading an up market as opposed to hanging on in a downmarket. I dont know what to make of the whole thing. Weve had utilities run, and had staples run and had gold run. Right. All the way from basically the december rate hike. Everyone thought gold was going to sell off. Everyone thought basically the dollar was going to rally. The dollar ultimately sold off, and utilities ran aggressively. Gdx, we talked about it may be three weeks ago or so. It was up 85 . I said believe it or not i think its going to rally more. Its up 95 . I dont think they are going to turn around. Its xlu and the staples. Its gold. You know, what about, steve, to karens point though, that, you know, weve had this market come almost all the way back, yet we still have the almost record lows in interest rates, especially if you look at the tenyear, and that doesnt really jive. Well, if you look at when you talk about negative yields globally, that number of 11. 6 trillion in negative yields is going to come back to us in some way, shape or form, and i dont care what the fed does. The fed is most likely not going to do anything. I dont think the fed is going to do anything for a while. Even if they do, we have to talk more about multiple expansion and yes, xlu on an rsi, relative strength index is overbought, and when you look at the search for yield, youre not finding it anywhere else, so people have been burned with lets get out of them, but people still drive the market higher, and believe it or not, as we started the show, growth has gone and the new defense is basically defense and growth. Yeah. One of the other elements of whats going on here, you think about the ecb and what they are doing. They may now be buying emerging market debt. Weve got 12 or 13 emerging markets and Central Banks around the world cutting rates, so a lot of people have thought that em was a credit bubble that was going to be another black swan event. If you think that weve taken the fed to the sidelines. I know brexit is not positive for global growth, but on some level were addressing or dealing with it and pushed that off to the side and will continue to deal with it. Now created an environment where the fed is absolutely sidelined. Weve got earnings coming up around the corner and a rationale where people can look and focus on equities and have to allocate to equities. Sue, quick, im sorry to interrupt. I think earnings are going to matter and youve got your week, week and a half away from an Earnings Period where they absolutely have to matter. Im sure most of these companies will talk down growth given whats going on in europe and i use this word at 4 00 and ill use it with you now. The chas many between ep growth and Revenue Growth has widened out and Revenue Growth has to catch up. It hasnt for a while and needs to soon. The comps are getting interesting, kind of easy, so i realize were in a world where were talking 120 on the s p, is it 115, you know, again, im sure you can make an argument of 110 but the bottom line is comps are not terribly bad. The dollar, depending on what cross youre looking at and this is the thing that people make the mistake on. Year over year the dollar is down and on some of the important crosses the dollar has rallied and theres a lot of places where there is growth in the world and the dollar is substantially weaker against those currencies so i think you have tail winds from multinationals and very good comps. Today, too, we had month end so id be leery jumping back into the market. We had month end. Tomorrow is the first day of the new month and wait to see how it reacts. Next week is a shortened week. Wait another couple of days or so to see where it all shakes out. Where are you guys where are you putting money to work . Karen, ill turn to you. You were on one of our specials earlier this week and you were lightening up on some of your financials, right, because they had the most exposure directly anyway to brexit, right . I do like only u. S. Focused financials, but i did lighten up. I like names like facebook and google. They have bounced back and were down about 8 which i thought was just way overdone. Well see, as guy said, earnings coming up. You know, i im optimistic about facebook earnings. I think brexit will really not be a big issue for them. Thats where im comfortable having money. I dont know what the market is going to do. I try to hedge around t. Bought some s p puts yesterday. A lot cheaper today than yesterday, but ill probably buy some more because im very surprised at this market action. All right. Just because stocks rallied again today doesnt mean the u. S. Is out of the woods. We were just talking about that. Bank of america warning that companies will soon reveal how brexit is affecting them, and it could get ugly as we head into the next quarter and earnings season. Joining us is the head of u. S. Equity and quantitative strategy for b of a merrill lynch. Ive been a fan for a long time. Oh, thanks. But never had the chance to talk with you so its a pleasure. Likewise, thanks. So we have seen stocks come back quite nicely which nobody really predicted this week, but you still remain quite bearish longer term. Why . Well, i think its kind of surprising that weve seen gains retraced in a matter of two days so our expectation is that if we got a leave vote, if brexit actually happened, we would see about a 7 kneejerk reaction from the market. Thats basically what we saw, but then it quickly just rose right back to prebrexit level so its almost like the brexit never happened. You know, i think a little bit of it is the month end effect and quarter end effect and we need to look past and take a closer look at what happens in the next few trading days, but i also think, you know, if you look at leadership that you were talking about earlier, the fact that utilities and telecom and high dividend yield is leading isnt surprising, you know. I think its really were back to that where is the alternative for yield type of market . Theres no place to get yield. Right. And if you look at the s p 500, 60 of stocks in the market offer a dividend that is higher than the tenyear which is pretty remarkable. It is. But thats been the case for quite a while. Thats not really new. It just keeps getting worse though. Thats the kicker is that yields keep going lower and dividends on s p stocks look that much more attractive as we sort of follow yields lower and lower. What about steve grassos point earlier and it was guys point as well that, yes, were coming into an earnings season thats going to be important to the market. However, comps may look pretty darns they time around. Sure, yeah, i agree. I think this earnings season is actually going to look a little bit better because youre coming off the strong dollar impact, you know, Lower Oil Prices so all the macro trends are improving, but what i think is going to be important is commentary from corporations because whats kind of unnerving to me is that if you look at last quarters commentary and companies outlooks only 26 companies in the s p 500 even mentioned brexit. 26 companies, a very small proportion of Companies Even had this on their radar. Now all of a sudden youve got potential for weaker growth in europe and potential for a recession in the uk. But is it too soon for that. I mean, would you expect them to comment on that at this point because we dont even know how long its going to take until article 50 which makes the whole thing official. We dont know anything until october, youre right. Theres a bunch of time that goes by before we even know anything and do i think that they are going to get questions from the street, you know, on how are you thinking about your European Division or your european sales exposure given whats going on and thats where they real very to think hard about, you know, their exposure. Okay. I think the problem is with this that, you know, a decent chunk of u. S. Company sales come from europe, 20 or more, and thats going to be the risk. Where our economists have actually taken down the forecast on european gdp growth pretty aggressively. Thank you so much. Appreciate it the. Thank you very much. Guide me through this. Lets trade it. So let me just ask you a quick question. When you look at savitas theory on the market, you see the market sold off, and when we trade it down to 1810 on the s p, only down there between 50 and 60 did is basically and then were right back to those preselloff levels. This time it was a week. Isnt it starting to be i agree with everything that you said. I dont have any fight with anything that you just said. I agree with everything, but the problem is the market is extremely resilient. You said it. It pushes money back into the equity market and it just seems like the chairs might have changed, but the equity markets still can continue to go higher. Sure. I mean, i think that there is upside risk. Heres the problem though. Not only is there brexit. Were heading into a seasonally weak period. Weve got i think the big problem right now is that two channels of liquidity are slowly shutting down. If you look at Senior Loan Officers standard, lending standards are getting tighter for corporations. Activities have been de minimus. Companies are having a tougher year raising capital than they were a year ago, two years ago. Thats a late cycle phenomenon and were back to leverage raichos that were akin to back where we were in 2007. It feels like were getting longer and longer in this bull market and exerted all the levers that we can to extract values from corporations based on cheap financing and seen tons of m a and lots of share buybacks and all sorts of financial mechanisms to generation Earnings Growth and nothing real and thats what wore ice me is youve had this exogenous shock happen in a fragile market, late cycle. Thats what feels a little bit less resilient. Its been a pleasure. Thank you so much. Appreciate it. Thanks for having me. Coming up next, well find out where melissa is. She was on 34th street last time we checked. Hersheys soaring after rejecting a buyout offer from monday lease, but is an even sweeter deal right around the corner . And tesla tanking after hours on reports of a probe into a fatal crash during its selfdriving mode. Phil lebeau will join us with all the details and a bit later the one stock that some are say, could be, get this, the worlds most dangerous stock. Yeah, pretty darn scary. Well give you the name when fast money returns. Welcome back. We eve got some news. Mel is a lee is at the nads damage. She made it through. Hi , miss y. Hi , sue. Thanks so much for covering. You did a great job. Ive got to tell you. Sue rocked it. That is the worst feeling in the world. Youre sit ing in the car going please go fast er , please go fast er. Somebody get mel is a a cook tail. Have a great show , guys. Were getting a little more information about this investigation being conducted by the national highway Traffic Safety administration. It has to do with a tesla model s that on may 7 was involved in a fatal accident on a highway in florida. Let me set the scene for you. You basically had a tesla model s that hit a tractor trailer that was turning in front of the model s so you had basically al truly their turns in front of it. Because of the height of the tractor trailer the model s slid underneath the tractor trailer and thats when the fatality happened and the driver of the model s was killed. Its based on the design of the autopilot system. Within the last half hour tesla released a statement regarding the circumstances of this accident saying either ault pilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky so the brake was not applied. Understandably shares of tesla have been under pressure ever since the news broke about 45 minutes ago this. Brings up the question, guys, people will say, well, what exactly happened in this accident and how will they know if the autopilot failed . Well, there is a data reporter in all vehicles including the model s. Request the they will no doubt take that data recorder and look at it and analyze it and if possible, i dont know if this is possible or not. They will get some determination about what did the auto pilot radar, cameras. What did they see . Did they send any type of a sensor for a warning at all . Way too early to know if in fact this is a case where the system out and out failed and didnt see anything at all. Did it alert the driver and slow everything down . Interesting when all those details come out. Well see if the head of nhtsa or the head of the u. S. Transportation department, anthony foxx, issue any more statements over the next couple of days in terms of while we investigate this, people should or should not use their autopilot features in their tesla vehicles. Again, this investigation just beginning. The accident on may 7, a lot of details that we still need to learn. All right, phil, thank you. Phil lebeau in chicago for us. If you read the tesla log it makes clear when you use an autopilot the driver acknowledges essentially he or she must be alert at the wheel and must be ready to put both hands back on the wheel and regain control. This is not autonomous driving. Its an autopilot feature. How much damage do you think this will cost the stock which has rallied over the past several sessions initially. I think theres a lot of reasons to sell tesla. Andrew has talked about many of them on this show. I dont think its tragic but not one of the reasons to sell it. You just mentioned the huge run. Had a substantial lunn up to the 180 level that we flagged a number of times. Mobile had a huge state to the upside and its given a percentage of that back. The way to trade it, in my opinion, by the weakness in mobile. That to me is the most interesting going forward. You like that. I have liked it, but youre not really sure about the technology. Its so early right now and this stands to reason with tesla. No one knows where the technology is going to be. Is it going to be infrared . Going to be cameras or some sort of a sensor or all of the above and no one knows where to place the bets just yet so i think its really early there, but i agree with guy. A host of reasons to sell tesla. I would still be a seller of tesla. Yeah. Every time weve had one of these batteries blow up or had fires in tesla over the years. These have been effectively nonevents. The event here is tesla should not be priced as an auto company. It should not be priced as a software company. It should probably be priced as a Battery Company and theres a lot of risk around the solar city tesla merger. One of the reasons why the stock has bounced back because i think theres been some ebb in terms of the expectations. This goes through. I agree. As sad as it is, i do think its a blip in the evolution. Tesla story. Okay. Still ahead, are biotech stocks on sale . Weve got a back of the envelope analysis and why this space may be looking cheaper than ever before. Im melissa lee f