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tv   Fast Money  CNBC  February 24, 2017 5:00pm-5:31pm EST

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sun evening. "west wing" guitar recital. one question to ask warren what would it be? >> warren buffett? would he vote for donald trump that trump would have made him this much money. >> thank you guys. have a great weekend. that does it foreclosing bell. "fast money" begins right now. it was looking bleak for the rally. stocks were on the floor. just like rocky punch by punch stocks clawed back and finished at its 11th straight record the longest stretch since 1987 when ronald reagan was president. stocks hit a new record, bond yields touched their lowest levels of the year. why are bonds and stocks rallying together and which is the first to break >> why does either one have to break. this great music coming in on friday. "rocky" was one of your favorite movies? >> ii. >> bonds have rallied until
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recently and stocks have rallied. i don't see where the disconnect is. yields have surprised me. without question. i didn't think yields would go down to where they are now. vix would tell you down another 2% today that stocks want to go higher and the vix trades down to single digits. why? people finally said who needs this insurance stuff, the market will just go up. it's going to catch people off sides but not going to happen yet. >> i guess the price action over the last couple of days. the bond's rally -- the rally you saw in europe and japan was more extreme. the u.s. rally bond yields came in 4%, 5%. we're down to key levels. you break to 30 on that ten year you go to 2% quickly. that's disvaluation, refuting whatever you want to call it, an indictment against this the fiscal policy. things like em, em sells -- we
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haven't sold off this much in six weeks. there's a lack of sense that the rates are going higher and the fed needs to move. >> are we ignoring some warning signs? >> i would say yes. to 30 is a key level on the ten year treasury bond because we've been in this range. if we break that then you get some correlation, the dollar versus the yen which has been a risk off indicator. then you'll see that filter into the u.s. stock market. yes. to tim's point why are bond yields rising? it's because people are buying german bonds out of safety and shorting the periphery. there's an economic reason. there's a reason why people, why bond yields are falling. >> right. let's just bring it back to the u.s. stock market for a second the dow jones industrials average, goldman sachs is 20% of the gains since the election. the stock is up 40% or something like that. if you have a scenario where you see bond yields going where you think they do if it breaks to 30
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in the ten year treasury what happens to bank stocks? that's been a huge part of why they rallied the way they did. the idea of other stuff has to happen with deregulation. if we get into a scenario where some of the deregulation doesn't happen and yields come back in then you have a group that's a major contributor to the stock market gains. >> to push this further what we do know from data is that net shorts on bonds are very high right now. people are very positioned against bonds. could we see a short squeeze which could exacerbate this move higher in bonds >> probably a lot of what you're seeing. tim mentioned german bonds. my push back is this. i agree. why is the vix down 2% today and why is it 11 and a half. >> the bond credit always leads stock. stock investors and i would argue this has to do with passive investing. people are plowing money into
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the market. they don't care what's happening in the world. they are putting money in because it goes up. it does matter. when credit leads equities there's an issue. >> i don't know that credit is doing any big damage over the last couple of days. financials are off 2% because bond yields -- yield curve is a little flatter than on election day. gone in from 136 down to 117 in change. to me the move is the fear factor. the vix can go down more because we get back to the central bank put. i don't want to get back to the world we were in before november 8th. the world changed then. the market expected wrsh deer now going into a pro growth environment. central banks have to back off. fiscal policy will force that change. what's happened in the last couple of days that's unwound. it's not fear time. it means boy we'll go back into this malaise and that's bad for risk. >> what we saw today was a sharp
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or for the week a sharp move higher in utilities, telecom stocks. they are still by the way at a higher pe than overall markets but is that the place you want to go, you want to be in equities? >> i think it is a function of over the last couple of years as we saw rates the ten year treasure jay yelled go down last summer to 131 or something like that. tho those are the trades that are working. it worked in the past. should work going forward. listen, i'll say one thing because i know "options action" is in 20 minutes. don't spend too much time talking about spot vic and what it means for complacency in this market. >> look at me when you say that. >> don't look at me. >> i'm just saying -- there's other things going on here. friday afternoons we see the vix get marked down. the point, the most important point a lot of complacency among
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equity investors however you want to view it and whether it's a chase for utility stocks or treasuries. >> so let me put this question out there. so would you rather -- >> i love this coming on a friday. >> stocks or bond? >> bonds in the short term because i think the momentum is there -- u.s. equities going sideways but bonds seem to be short covering rally so more in bonds. >> that's consistent where you've been. if you look at the good things that happened this week that's supportive of equities and negative on bonds, pmis -- we're at 69 month highs in germany, 35 month highs in japan. housing data in terms of existing home sales which are at the highest they've been in this cycle. the housing market the chugging along. these are equity positive moments. i don't want to throw the equity argument out the window. i want to tell you markets right now are struggling with the politics and policy and bond yields are telling you doesn't
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look like what we thought. >> let me ask another question. you liked financials. >> die. >> now what? >> well, i would say take your profits for sure. we have a flattening yield curve. i'm not convinced we'll get the 4% growth. if you look at some of the gdp estimates out there they are below 3%, some closer to 2%. i don't see how you get a massively steep yield curve in this environment and when you have financials that have run so much, everything is priced in to that. >> i agree. a lot of it has to do with the fact, look at the messaging out of this white house. every other day it's a different thing. we heard something from the treasury secretary and something from his ex-colleague, the economic security or economic adviser today what he thinks. they are exact opposite. look how stocks are moving on this sort of stuff. as far as the banks are concerned i would stay away because the one thing is if they roll back too much regulation in the bank stocks he's abandoned
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that populist -- he sold out the base by putting these people next to him and rolling back and look where -- >> you're saying the banks are the people that should have been their enemies and people are wrong voting populist. i'm trying to clarify what you're saying. you guys would be buying the banks. financials are profitable again and they've never been -- they never had operational upside. >> stocks weren't the only thing going higher. gold at a three and a half month erasing most of its losses since the election. there's even more room to run. >> i don't know last time i sacheted. u.s. gold and the dollar. going back to february 2016. gold in blue, u.s. dollar in gold. i don't know why they did that. they should have flipped it. you can see here we had this selloff in gold. this was after the election. rising dollar, typical inverse
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relationship between gold and u.s. dollar. what happens as soon as the $started to weak jean bit and hasn't weakened a lot, gold started. where's chart number two. it's coming up. chart number two, expected inflation. expected inflation in blue. look what happened since the election. people are expecting inflation to rise significantly from where it was down below 1.4 up above 2 and as soon as the dollar started to weaken you saw gold rip. so do i think it will continue? absolutely. you're still seeing that inflation uptick and if yields continue to go lower like we just talked about then you're going to have gold go much higher, it's set up for that. the other part of this is a safety trade. gold in and of itself becomes a safety trade. let's go to another one of my favorites is bit coin. gold versus bit coin.
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both have gone up in the last week or last month or so. to me there's no correlation between these two. these markets don't necessarily trade together. they are both safe-haven. if you're a millennial buy bit coin. baby boomer you buy gold. in bit coin what's going on an etf coming out march 11th. people are betting on that. don't get fooled on that. >> you pulled a muscle. the >> can i ask a question when he finally makes it back on tuesday. >> please. >> you mentioned the bit coin is going to potentially have an etf. my push back would be doesn't an etf and i asked today on twitter, isn't the scarcity factor of bit coin what makes it interesting wouldn't an etf fly in the face of that? >> no, not necessarily because it's still just like gold. still scarce. i think the other point that i
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thought you were going ask me this morning is that -- bit coin is supposed to stay outside of the financial system. by having an etf does that now mute that point. i would say no. zbold a decentralized currency so is bit coin. >> i would say if you want that safe-haven go to treasury, tlt. it could be a straight shot back to 130. coming up retail spiking despite contrasting headlines about the border adjustment tax. we'll break down fact from fiction. plus the academy awards are taking place this weekend. jeff bezos could walk away the big winner. traders have the perfect way to profit from a pull back. much more "fast money" still ahead.
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plan from house republicans. this comes after president trump appeared warming to the idea telling reuters yesterday that border adjustment would create jobs in america. the white house said quote there's no daylight between gary cohn and the president. i spoke with a congressional aide this afternoon about these mixed messages. he said there's no panic coming from house speaker paul ryan's office just yet and no comprehensive tax reform is going to be tough to pull off. this aide pointed out key trump adviser steve bannon and steven miller support beauforder adjustment. it comes down the president to make this call. the number of republican senators raising concerns about border adjustment is growing. susan collins of maine is the latest one i saw. trump is supposed to weigh in with his phenomenal tax plan within the next week or so but speaking behalf joint session of congress on tuesday and maybe we'll get some clues there. >> phenomenal. thank you very much. we bring you those reports. we talked about it all day today
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because of the spike that you saw in the retail etf, the xrt when those comments -- you saw the spike there. at that point the etf was up by 2.25%. what is an investor supposed to do when you get these contrasting headlines. you don't know where it will fall. it falls it means an big impact. >> investor trader. i think if you're a trader -- first of all, i don't know if the administration knows what they want to do. it's clear by her comments they don't have an idea which way they want to go. nordstrom has been grim death for the last couple of months right up until the ivanka trump stuff. stock has rallied ever since not meaningfully. decent. up 5.5%. with short interest in these names, with potential for rhetoric to ease over the next week or so in terms of border adjustment tax or not i think you could see a short recovery rally in 10%, 11%. gets you back to a $50 stock.
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>> we're talking about a low volatility market that we have been in. they are providing this messaging problem they have a lot of opportunities for traders. think of the volatility that's going around. the way i would look at it is you're getting the opportunity to kind of fade some moves. seeing straight up moves. 5%, 10% over a short period of time. the likelihood is it will reverse itself. when she just said bannon is in favor of that, is she talking about president bannon. she said it would be up to the president. but what i'm saying there's a lot of competing interest there and we know there's a lot of infighting. >> what was interesting we saw a sharp move on the xrt on the notion that border adjustment taxco be dead. we heard messaging from republicans in both the house and senate that if border adjustment is dead the tax plan is dead. we saw no reaction in overall stocks. if the tax plan were thought to be dead it's an isolated move.
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>> from a lot of people i talked to today they haven't put two and two together. the border tax is supposed to pay for this. they didn't think the tax cuts weren't is going come. what their thought is perhaps they will be decoupled, border tax goes away. >> investors have been very selective in places they choose to carry out where the border tax hits the most. why is amazon immune. they are at all time high. it just means the technicals have gotten even worse. you're at a place with names like macy's and the gap, these are stocks to buy. >> there was a great explanation. a company that has thin march garngs supply chain in asia that took 30 years -- can't do it. it won't work for them. they have to cut jobs. that's not a political statement. that's important to listen to. this is a woman -- had to fire a
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lot of people. the smart people around the president are going to get it and it's not going to happen. >> stale head think this week was a big week for retail stocks? next week could be bigger. one name that traders are bracing for to it go lower. i'm melissa lee. you're watching cnbc, first in business worldwide. there's one dow stock that is looking a little stretched and setting up for the perfect pull back. we'll tell the name and how to profit. plus -- >> you like me. >> we sure do. "fast money" is headed to the oscars in search of blockbuster trades. we'll give them to you when "fast money" returns. the strikingly designed lexus nx turbo and hybrid. the suv that dares to go beyond utility. experience amazing. this car is traveling over 200 miles per hour. to win, every millisecond matters.
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experience the lexus rx with advanced safety standard. experience amazing. welcome back to "fast money". amazon will be crashing the academy awards this weekend but can it one up netflix and beat out traditional hollywood studios to bring thunderstorms car for best picture. julie boorstin is on the red carpet in hollywood with the latest. >> reporter: the red carpet is under here. covered by white plastic. big picture win is the highest honor in hollywood and ameazon s the first-ever streaming company to be nominated.
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"manchester by the sea" has five other nominations. amazon bought the film for $10 million at last year's sundance film festival which grossed $60 million. amazon catapulted it past netflix whose "thirteen" was best documentary. amazon is a threat not just to netflix but to the hollywood system. it's raising the bar of how much both netflix and traditional studios have to pay for films and tv series. last month amazon out bid major studios on a number of sundance films, writing one of the biggest checks in the festival's history. amazon spending on movies is minute compared to the total $6 billion that jeffries project it will spend on content this year make being amazon a frenemy. there's another tech rival for hollywood predicting apple as it
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launches originals this year will win an oscar in the next five years and spend $7 billion on original contents. apple and amazon have an advantage when competing for oscar gold. they are not worried about box office. they are focused on drawing users or subscribe toers their platform. >> when do they take the white plastic off, julia? >> reporter: i think they wait until the morning of. i mean there are a lot of people here. people setting up. broadcasting. they don't want it destroyed. >> julie boorstin with the latest. >> same thing happened to my grandmother's living room. plastic over everything. never comes off. >> what does this mean for amazon should it win, dan? >> i think it's good. a sentiment thing. i know they will be a player. she made the most important thing. they don't even have to win. they have to have this content layered on prime.
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giving users more access to stuff. for them it's a win-win. >> you both saw the movie "manchester by the sea". >> it was special. >> i cried my eyes out. >> i got a call next day. that's okay. >> what does it mean for amazon? >> i think it means a lot for amazon and stuff like netflix. now you are an established tv studio and so it means an awful lot. now think about the content they can get and how they can screen it and distribute it just like the studios used to but cut ought the middle man. >> does it give amazon an advantage. >> it helps netflix more than amazon. i want reaffirms a model. amazon will be spending more dough. people are worried where margins are. does it prove that amazon prime works? i'm not sure this is why people use prime. >> you want to know why it's not as big a deal. what was best picture last year?
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"crickets." no that was not the movie. >> i don't remember. i don't remember movies. i'm not a good attorney ask. >> just saying. >> do you know? >> i know. >> really? >> anyway, let's leave the silver screen. blockbuster picks. resident hollywood diva tim seymour will get us started. >> i have to go viacom which is make a massive come back in hollywood. sacking mr. brad gray over the last couple of days things are changing. five or six core brands. >> i talked about gold. there's another metal out there, silver, slv. that's a thinker. >> cisco, they just had some good results. stock had a big run. 32 bucks.
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>> what tim doesn't know when the music plays stop talk. netflix, bam. >> that does it for us here on "fast money". thanks so much for watching. don't move. "options action" starts right after this break.
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times square, the guys here are getting set up. here's what's coming up on today's show. >> that's when traders are saying about one hot trump trade. we'll tell you what is it and how to profit. plus -- >> you want to see something really scary. >> look at shares of retailers and one name could feel the pain next week. we'll give the set up. and, talk about a shocker. tesla shares are going in reverse. and there's one reason why they could go a lot lower. we'll explain. the actions starts


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