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tv   Fast Money  CNBC  July 16, 2021 6:00pm-7:00pm EDT

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bets on that and to help finance it is to use calendar spreads and diagonal spreads like the spreads we're taking a look at in moderna which is quite extensive here. >> we have a busy earnings week next week. have a great weekend that's it for "options action. we'll be back next friday at 5:30 eastern hey, there, have a fast money special edition coming your way over the next hour. we're baking down the big risks and the big opportunities as tensions flare with china. you'll hear from one top money manager with $5 billion on the line how he's playing a big pullback in chinese tech stocks plus, dethroning the dollar. the rising risks as china develops its own digital kerr aents. could it change the game for the entire global economy? >> later, the big bet. why some investors are rolling the dice on a casino comeback in
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macao. the three stocks you need to keep on your radar we start with new developments out of the white house at this hour the biden administration issuing a warning to u.s. businesses operating in hong kong the message, the risks are rising there as china cracks down on democracy. cnbc's eunice yun in is beijing with more. >> just the threat of president biden's advisory to u.s. businesses operating in hong kong set off chinese officials today. the official overseeing hong kong accused the u.s. of attempting to embolden anti-china trouble makers and vowed china would retaliate against any further sanctions on its officials. president biden wants u.s. companies in hong kong to be aware of what he described as the deteriorating business climate under the year-old national security law, such as electronic surveillance without warrants, u.s. deputy secretary of state wendy sherman is set to visit asia next week, china
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reportedly snubbed the idea of a meeting with her chinese counterpart. the tensions come as china clamps down on its tech titans the stated goal to safeguard chinese data tromforeign influence. today, the country's cy cyber watchdog along with six other departments launched an is part of a review after the company listed in new york the authorities listed didi as a critical infrastructure provider with a trove of data and listed overseas could pose a risk to national security. china's regulators are requiring companies looking to raise funds overseas now to report for a cyber review first though those going public in hong kong might be exempt. didi's apps are now off app stores and platforms here, and the company can no longer register new users >> thank you, eunice take a look at shares of didi.
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the stock falling another 3% in today's session. now down more than 14% since going public in late june. so as china turns up the heat, how should investors position their portfolio? joining us is john rutledge, chief investment strategist. he's still finding big opportunity in china, and fast money trading nadine just made a big bet against china. john and nadine are cnbc contributors thank you both so much for joining us today john, i want to start with you because these days, it's kind of a contrarian bet to be bullish in china given all of the news flow it seems like it's coming fast and furious by the hour these days what gives you this conviction at this point in time? >> well, you know, i have never made any money out of the herd, and the herd is now definitely full of china stories. and i think people are pretty darn confused between inflation stories, growth stories, covid, china, hong kong, taiwan, et cetera i don't think china is a very
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timely bet right now, but i think china is a bet, is an investment you can't afford to not have in your portfolio the question is how much of it so i like to pick out a few names that i think are going to be there a long time from now, and keep my eye closely on what's happening in beijing because it is very important >> okay, i want to get into these names in just a moment first, i want to turn to nadine. now are taking kind of the opposite view on this front. you're more aligned with the herd, so to speak, in your bearishness. you recently shorted fxi, the china index, this week what kind of informed that opinion, that decision to short the fxi? >> well, leslie, there's a few things going on. one, let's call it the macro the growth of gdp has been decelerating in china. that's a known, but it keeps happening. we don't see that turning around until later this year. call it the end of the fourth quarter, maybe beginning next year
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and the second one is the reopening momentum has really been threatened. it's, of course, fiscal support is lower than people expect. the cases of the covid and variants have gone up, which has been a negative, at least from a headline, as john is pointing out here but third, it's been china's economic slowdown. that has had a huge effect overall globally, but importantly on the chinese markets. then the last one really comes down to chinese credit impulse it keeps slowing we actually don't see the liquidity dynamics improving until late this year from a macro perspective, it's hard, as john said, in the near term to get excited about this and so it doesn't mean that there aren't great companies there. we have traded a little bit differently. we can talk about one on the long side you can benefit from some of the volatility in the headlines, but what we see is the technicals on something like the fxi, even though the short interest is coming up, it's been broken down, so we can't see the
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macro and the technicals aligning until later >> a long bet from a bear on the region is definitely intriguing. where do you think investors could feel confident putting their money right now? >> we have been long hong kong exchanges. what you have there is of course, their exchange so just as they're asking people not to go on our exchanges for ipos, we want them to go public. they want them to go on the hong kong exchange. there's a great example where you can be invested in china, but you don't have to be long what everybody else is long a year ago in tech and some of the bigger companies financially. >> john, you said you found opportunity in a few names what are those -- where do you see opportunity right now? >> some of them, of course, you can't buy here the names that are listed here that you can hold are some of them are well known. alibaba is one i like to own companies where i
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know the people who run the company, and i have met jack ma long ago alibaba is very cheap. it's going to be there a long time from now. ma has backed off. what xi is doing is regulations, it has to do with nationalizing data and wanting to make sure those companies are not too powerful and he's accomplishing that. i think you're going to see alibaba do somewhat better i think the credit impulse story is real. the pboc is also lowered reserve requirements i think they'll do it again. they do that whenever foreign capital flow is slow so biden's remarks today are going to slow capital flows into china. i would expect that to trigger another move by the central bank >> that's interesting. >> very interesting to me, billy billy and pinduoduo. both of whom are selling at numbers like two, three, four, five times a couple years out
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earnings and cash flow are very central to what's happening in china in the food business and in online commerce and are deep, deep price trouble in recent weeks. they're very cheap at the moment i own less than i did before i still hold them, and i will hold more this year. >> what does that mean, you hold less of these things as you did before what kind of changed your shoe on that and what would change your view back >> well, it's really just the timing of it is so terrible right now, as nadine said. we not only have had numbers, i think the gdp numbers are actually stronger than most people are admitting but nevertheless, we see things like ericson crash this morning, when sweden outlawed huawei in their 5g networks. and didi was a shocker because they exited that after the company's ipo.
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so and this week with the state department, what was meaningful about that is that biden did it right, which is try and have vice minister level people meet each other the chinese responded by trying to get him to meet -- her to meet a five times -- five level lower person, and we refused that's the right thing to do that's what we didn't do during the trump days because they sent us the number four vice premier, and he sat with our president and made a press conference. that's a loss of face in china so i think we have people working on it. but xi's side is very difficult right now. and what they're doing essentially nationalizing the tech industry is a very dangerous thing. so this should be something that's only for a long-term thinker who is willing to ride it out for a while, but right now, these daily blasts we're getting from the government officials are something i don't want to be too affected by but i also want to be there when
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the prices turn and rise back up again, which i think they will >> nadine, john mentioned gdp, of course, this week, china reported just 7.9% for the april through june quarter of course, those numbers sound wonderful for anyone here in the u.s. or many western countries but for china, that's considered a slowdown in growth obviously, last year, a bit of a tough comp given what happened with the pandemic and all. do you still think, though, that growth is enticing and that for a money manager these days, you need some sort of exposure to china because of that growth and just the fact that the economy there is just completely different than what you see in the rest of the world? >> leslie, you make a lot of really good points i think the key differentiation, though, is the level of growth is very attractive, but it's the relative growth. so it's decelerating, as ray
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dalio had pointed out through his investment process, it's the rate of change that matters. something accelerating or decelerating, and when things are decelerating, whether it's gdp or inflation, you have to be careful. or accelerating in the case of inflation. so that's really what you want to look at but it doesn't mean you can't own these businesses what i'm saying, and i think john is saying too here, is the timing really matters. and unfortunately, because it's been pretty volatile, you don't want to lose 14% after a company goes public, right like didi, so the timing really matters from your pocketbook and what i'm saying is youneed to take some time here before you enter. it doesn't mean there aren't some great buys. but not everybody has that type of stomach to get hit in their pocketbook and then wait for the duration play. so we're just trying to time it a little bit better. >> we started with a bull/bear debate i think over the course of the
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conversation, you ended on the same page. interesting conversation i really appreciate you both joining us john and nadine, i hope you have a wonderful weekend. thank you for joining us still to come on this special edition of "fast money," tensions between the u.s. and china heating up where we'll break down the political risk and how it could play out in the market. plus, china's aggressive push for a digital yuan, is the country trying to corner the digital market >> and the race to dominate ev can china beat the u.s. companies betting big on electric we'll hit all that and more when "fast money" returns on "tech check," signs of weakness in the rally. or do they have more room to run? stocks and opportunities to watch. "tech check," monday watch and listen live on the cnbc app
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♪ watch the olympic games on xfinity ♪ we're made for. ♪ root for team usa and feel the energy ♪ ♪ 7000 plus hours of the olympics on display ♪ ♪ with xfinity you get every hour of every day ♪ ♪ different sports on different screens ♪ ♪ you can watch it anywhere ♪ ♪ and with the voice remote ♪ ♪ you never have to leave your chair ♪ show me team usa. ♪ all of this innovation could lead to some inspiration ♪ ♪ and you might be the next one to represent our nation ♪ ♪ this summer on your tv, tablet, or any screen ♪ ♪ xfinity is here to inspire your biggest dreams ♪ welcome back to the special edition of "fast money." we're breaking down the big risks and big opportunities for u.s. investors as tensions flare with china and our next two guests have been on the front lines of the u.s./china relationship.
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joining us now is cnbc contributor towardic mcneill he's served in the obama administration at the defense department, focusing on china security relations with the u.s., and cleat williamsering partner at aiken group and former trade negotiator in the trump administration gentlemen, thank you so much for joining us on this friday evening. i want to start with you because we talk about this clamp-down on chinese tech companies. and at the heart of it, it's really this idea of data that has suddenly arisen at this national security concern for the chinese. how much should we be concerned about that especially as we see the interconnectivity between businesses that operate in china, as companies are listed in hong kong, in china, here in the u.s. investors all over the place there's just so much going on. so many moving pieces here is this something that we think will really make a meaningful difference >> absolutely. you hit the nail right on the
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head by identifying didi as very different from ant, where we thought this was about controlling anti-munonopoly behavior at home and in china. the chinese are very concerned about national security and data so much so now they're up to 12 agencies that can weigh in over these ipos and yellow flag or red flag this, slow it down, or halt it completely i think the greatest risk to investors right now is just the uncertainty. we have no idea what's going to come out of the back end of this didi investigation, but whatever comes out will actually set the precedent because this is the first of its kind. i think the risk right now is just uncertainty we have no idea what this is going to look like and while i do think some of these ipos will get done, they will come to the u.s., it's not going to be quick, not going to
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be sakeeamless. we're in for a bumpy ride. >> it's interesting because historically, the reason a lot of chiep ease companies came to the u.s. is because the capital availability in the u.s. was seen as second to none globally. you could come here, maybe getting a higher valuation you may have had to have some unique structure to list here but it got done and investors traded accordingly now there's this ever present threat of the possibility of delisting. you have companies doing secondary listing. there are certain issues as it pertains to auditors and the u.s. is really clamping down on the ability for the public company accounting oversight board, the pcaob to insure that financials are up to snuff for the chinese companies who are listing here how big of a threat is that to the ongoing conversations or lackthereof to a certain extent between these two nations? is the delisting threat and the kind of siphoning off certain companies and giving them
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incentives to list in hong kong or in china going to be a major sticking point here? >> i think it will be a major issue for years to come. and i really have to confess that when i look at the issue of chinese companies listing in the united states, i really think it's just a matter of time before that's no longer an option and the core issue you have here that's like this conversation has been that chinese government rules have not allowed for u.s. regulators to look at the books and records, look at the audits of chinese companies that are listed on u.s. exchanges and china is using the exact same national security arguments that they're using about data and ipos to say we can't let u.s. regulators get access to any of this data and any of this information about these companies. so i really don't see any way that china backs down. and on the u.s. side, i mean, this is a law from congress. and so it's really hard to see
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the u.s. backing down. and so i think these issues are coming to a head and it's really only a matter of time before those companies have to look elsewhere. i think these latest moves by china really signal that china is preparing for that. and they're basically saying, okay, come back home come back to hong kong and list. and that's where we're not going to put the same regulatory requirements on you as we would if you want to list in the united states. unfortunately, i think that's the trajectory we're in. >> this week, we saw lee auto with a secondary listing abroad in hong kong as well do i understand you correctly, clete? you do not believe chinese companies will be able to list in the u.s.? what about the $2 trillion in market cap of chinese companies that are already listed in the u.s. i mean, this would be a major, major change and how soon are you talking about that change taking place >> well, the law that congress passed says by 2024, if this
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issue is not resolved, then those companies will need to -- and there has been some hope that the chinese and u.s. regulators can get together and come up with some sort of agreement that would allow for u.s. regulators to have access to that information. that would prevent this from happening. but my point is, those conversations have not been going well china has been basically saying we're not going to allow this to happen for national security reasons. if that's the case, i don't see how the u.s. backs down. and again, it is -- we still have a couple years to go, but the body language, the signals we're seeing now are very, very negative in my opinion >> quickly, do you agree with clete here do you think this is never going to get resolved? >> actually, i do believe that on the tech sector side of things, we're heading likely for this kind of vulcanization i would actually put a fast break between the tech sector and some of the other companies that may be looking to ipo here
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in the u.s but i do share some of those same gloomy predictions about the tech sector eventually and we are likely heading towards a balkanization, that's unfortunate but likely true, yes. >> wow i hope a lot of investors are watching these comments right now. very important and insightful for what is to come. even if a few years away thank you so much for joining us and providing your perspective up next, $5 billion on the line you'll hear from the cio of one of the most popular trading vehicles for u.s. investors wanting exposure to china. the kweb etf is down big how does a fund manager with so much exposure to china deal with this volatility? we'll find out when ispeth scial edition of "fast money" returns.
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edition of "fast money." the ripple effect of china's business crackdown hitting the country's major tech companies hardest. the group's highest flyers, a ali alibaba, baidu, and jd and more shedding $500 billion in collective market cap since their february peak, but the big pullback could present an even bigger buyer opportunity seema modi is here with more hey, seema >> hey, leslie that's exactly right a volatile space to watch, after a strong start to the year, alibaba, baidu, pinduoduo among other chinese internet stocks peaked in february, shedding billions of dollars in market cap, as you can see here the sell-off has raised serious questions around valuations with the sell-off, multiples have contracted, alibaba, for example, trading at 19 times earnings, below historical average of 24 times. baidu,, also trading at a significant discount to their respective averages.
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even if you look at enterprise value to ebitda for 2023, which most wall street analysts use to value these chinese internet stocks, trading well elow thei longer term average. james lee, managing director at mizuho say investors recognize that valuation levels are compelling but says they're waiting to see if the regulatory announcements out of china start to slow down, especially when a major political event like the one we just saw occur. if you look back at history, lee says regulatory cycles in china appear to be transitory, whether it's online payments in 2018 when china's central bank required platforms to report directly to them that took three quarters to complete and then you look at regulation of medical ads in 2019, asking companies to provide a license that review price ended after one quarter. the key question, of course, is wall street is trying to answer is how long will it take this time how long with the current regulatory review taking aim at some of the biggest tech
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companies in china last? and leslie, will it extend beyond china to u.s. multinationals that operate in china and have been growing their market share think names like starbucks, nike, caterpillar, and tesla among many others. >> that's a great question one we were talking about with john and nadine earlier where the idea of timing, how do you find the opportunity to invest in the short term, is it a short term play. do you plan on investing for the long term? it's a really volatile area, and i think timing is one of the key lessons here, seema. >> always. >> all right one top proxy for china tech has been kweb, the popular etf that holds the largest internet stocks alibaba, tencent and, down 10% this month. it's pushing kweb nearly 40% below its february peak. joining us is brendan ahearn, we
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should note that crane shares is a beijing based investment bank. many invesers use kweb to garneresh poregarn er exposure to chinese tech names. >> we think this decision with didi is an isolated event. there's chinese regulation occurring on the internet space, but the situation with didi has weighed opthe entire sector when we think this is a very company specific issue >> company specific issue, but one in which we're starting to see more and more companies become subjected to. a lot of these things have to do with companies that haven't been listed yet, but do you expect to see more of these types of news-making, headline-making regulatory actions take place across the sector, and it's almost as if, you know, at least investors in the way they're valuing these things they expect dominos to continue falling as a result of this larger regulatory
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clampdown. >> it's very important for investors to recognize that the regulations are being adhered to and adopted to by the companies. we have not seen the companies fundamentals in any of the china internet names be hurt by the regulations. q4 earnings that were reported in february of this year were very, very strong. many of the companies spoke about how they're adhering, how they're adopting to these new rules. once again, the q1 earnings were very, very strong. the companies are saying, we're dealing with this new regulations, but it's not financially impairing them i think investors are very irrational almost to be selling these names when the fundamentals have arguably never been stronger. >> we don't know, right, what the fund amentals look like because what's been recorded is backward looking you have reported on the options market where investors have had maybe a different sentiment
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surrounding kweb recently. what are you learning? >> we're seeing a lot of investment inflows into kweb investors are buying the dip it's reassuring to see people taking advantage of the great, great companies selling at a real discount to both historical as well as relative valuations and we're also seeing that play out in kweb's option activity. 7 of the 10 highest open interest contracts are calls so we're seeing lot of call buying within kweb today >> interesting and have you noticed any kind of arbitrage between the different markets? we talked earlier about all of the various listings and secondary listings are investors in different markets trading these names the same way or are there various spreads developing >> yeah, that's a great question, leslie, because you have alibaba u.s., but you also have 9988. billy billy, badu, netty's, young china, many, many chinese companies have relisted in hong
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kong and the shares are convertible so on the reprevious segment wh we talked about the potential for delisting at some point down the road, institutional investors such as ourselves would convert out of the u.s. shares into the hong kong listings and that, we see a little bit more pessimism during u.s. trading hours relative to their hong kong. it's kind of interesting >> that is interesting well, thank you for keeping an eye on it. we really appreciate it. thank you for joining us still ahead, china's digital dreams, why the country is so focused on growing a crypto yuan, and could it disrupt the dollar's dominance >> later, is it too dangerous for investors to roll the dice on macao casino stocks we'll bring you that when this special edition of "fast money" returns.
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welcome back to a special edition of "fast money" where we're tackling all things china. new today, china's central bank saying it will steadily push forward pilot schemes to develop a digital version of its currency so what's really driving china's push for a digital yuan? we have more >> china has been working on its digital yuan since 2014 and it's quickly gained steam what exactly is the digital yuan i'll tell you what it's not. it's not a cryptocurrency like bitcoin. while bitcoin is decentralized, this will be issued by the central bank the aim is to replace cash and coins in circulation and bring digital payments to the masses it could help financial stability according to the central bank the pboc has already handed out
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millions of yuan worth of the digital currency in lotteries in cities across china for people to use in the real world an official has even suggested foreign visitors to the beijing winter olympics in 2022 could use the digital currency but there's no timing on a nationwide rollout just yet. some commentators have suggested the digital currency could be used to increase surveillance on chinese citizens others suggested it's part of china's broader efforts to internationalizeilities currency and displace the u.s. dollar all this comes against the backdrop of a cryptocurrency crackdown in china it's going full steam ahead with its digital yuan >> let's talk more about what's at stake as china makes a big push for a digital yuan. joining us is jeremy alair thank you very much for being here let's talk about motivation here
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arjun laid out the broad contours of what china is doing, but what do you think is the key motivation for creating a digital currency >> absolutely. first of all, thanks for having me on. happy to talk about this you know, i think there's a few things that really important to understand i have been watching this development really since 2014 when the project started and it had a bit of a front row seat on it and i think one of the really critical things is that in china, unlike in the united states, and unlike in other parts of the world, there was already a rapidly adopting digital money system run by the private sector alipay and wechat pay, used by over a billion people. so this is a country where you had very, very large private sector players that effectively were becoming the private digital money system in china.
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and as we have seen in other industries, and as we have seen very, very specifically in the financial sector, china has been reasserting its power over the financial system and in many ways, the ecny as it's now referred to, is creating a government-run alternative to these private sector digital moneys. in some ways, the rise of these giant internet companies and technology companies is a threat to the power of the chinese government, and so in part this is a response to that, to create an alternative that is fully controlled by the government and of course, as you have emphasized, that introduces different levels of potential oversight, let's just say. that are not in place in a private sector based digital money system >> the private sector fintech entities are seen as a threat in your words
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u.s., we have private sector fintech names here should the u.s. be doing something similar? should we be far more advanced in an effort to create a digital currency at this point in time should we be threatened by the fact that china is so far along in its quest to create this? >> so, i think the beautiful thing about the west and the beautiful thing about the united states and many other developed economies is that there's a long, long history of the private sector driving fundamental innovation whether that's core technologies like the internet itself, like the development of major standards for how we operate in commerce and business and in financial services in fact, virtually every major electronic money innovation that we know of today as individuals and businesses are created by and operated by consortiums of private sector companies, whether that's the international wire transfer system, apple pay,
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paypal so the west is not, you know, a place where the government runs everything industries are not nationalized. and so there is that long history. and in fact, that is exactly what's happening in the digital currency space, i mean, today, just to be clear, dollar digital currencies that are operating in a free market environment on the internet are already handling over a trillion dollars a year of transactions. the ecny is said to have done $5 billion in cny transactions. there's a rapidly growing dollar digital currency industry, so in some ways the u.s. is already ahead. and my ultimate response is i don't believe that the united states strategy in this particular space and within a number of others is to outchina china. we're innovating in space, electric vehicles, so many other
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places and that's how we should be growing these industries. >> how much of their quest to create a digital currency is do you think, explains what we saw recently with regard to the crackdown on bitcoin miners and the crypto sector in china >> there are many different issues here. china is very, very serious about the paris accord and about climate. i think the specific areas where they ask miners or force miners to close up were in areas where it was not clean energy. all the mining in china has not stopped. that was a very, very particular focus. and the chinese government has many times, not just in the crypto markets, but in the stock market, in fintech lending markets, in so mane of these very, very diverse innovative spaces, has had to come in and basically crack down is what we use, but further regulate these because of concerns over social
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stability. if you have huge amounts of the chinese population speculating and then losing money, they're going to come to the state and ask the state to deal with that. so any time you see a risk to social stability, the chinese government steps in. whether that's in the financial sector or other sectors. i think that's what's going on >> i think i have said the word crackdown or clampdown several times throughout the course of this show. it really does explain what we're seeing right now really appreciate you joining us thank you so much, jeremy. up next, some of the biggest names in business sounding off on the growing risks from china. what they're saying that every u.s. investor needs to hear. ecl itn hig it to you in ts spiaedioof "fast money." only 6% of us retail businesses have a black owner. that needs to change.
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we're back with this "fast money" special report on the rising risks in china. we heard from some of the biggest and most influential market voices this week on cnbc. all sounding off on the risks u.s. investors could face in china. in case you missed it, here's what they had to say >> there is a continuing sense of uncertainty and risk that is clearly present for investors, including myself, that presents a higher bar for returns so you know, i might very well invest in the chinese company, but my expectations for what the yield would be heightened so i think it adds a risk factor. >> there's no question the chinese want more control of the direction of some of the listing activity and so they're putting or taking steps that will give them more control and more of a say in that process for chinese companies. >> we do believe that china is clamping down. i don't know if it's capital
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controls i do know there's a little bit of a retaliation against the biden administration's policies, which are a continuation of the trump administration's policies. i think that's been the biggest surprise for china and i think for most investors, we thought that the u.s./china saber rattling would diminish somewhat that has not what you will not see us do with chinese stocks is pull out of those names that are more endemic to china itself. >> when you look at the relationship between the u.s. and china, in most sectors and industries that at least where there's interface between u.s. and china, there was real tension. and the participants in the u.s. had been pushing back publicly against china. but the exception was financial services >> the stimulus was kind of comical about it, is the stimulus is causing consumer behavior to be elevated.
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you know who benefits from the consumer behavior, what's the strongest economy in the world for the 12 months ending in the first quarter? it's china china is benefitting tremendously from our stimulus because we still buy so many goods that say made in china written on them. >> this crackdown is part of a longer term plan to move china away from its dependence on these foreign capital markets, on foreign companies, and apple is really the company that's most at risk because they have one foot on the pier, one foot on the boat, and the boat is about to leave >> still to come, two big investment opportunity zones we're talking casinos and cars we'll break down all of china's electric vehicle ambitions as well as what's in the cards for macao casinos. two top analysts will weigh in when this special edition of asmoy"etns
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welcome back to this special edition of "fast money" as we round out our hour-long coverage on china, we want to focus on two potential areas of opportunity for u.s. investors casinos and cars let's kick things off with china's big bet on electric vehicles joining us is dan ives, manager director of equity research at web bus security dan, thank you for being here. i just want to ask you, point blank, to level set things is the u.s. lagging china in terms of electric vehicles right now? >> oh, clearly, yes. we have seen really china take
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charge on evs for the last few years. that's why tesla and others have gotten aggressively after china. you're starting to see the green tidal wave take hold in the u.s. under the biden initiatives. no doubt, china is clearly in the lead on the ev, and that's really the golden goose for a lot of the ev players, both domestically as well as in terms of international players and especially in europe >> a big part of this obviously will come down to supply chain we talk about this a lot as we talk about electric vehicles the ability to actually manufacture the electric vehicles and vehicles in general, the whole auto sector has been caught up in issues as it pertains to the semi-conductors, the chips that go into the cars to make the technology really work for these high-tech cars. as well as battery innovation is another big area, as it relates to evs how does the u.s. stack up to china in terms of its supply chain? >> look, supply chain continues
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to be out of china and asia. i think that's really not going to change for the foreseeable future what i will say is that you really see domestically a need for supply chain being built out within the u.s. from recycling plays to battery technology, and of course, the oem and a lot of that is carrot and stick. 2% of autos today are ev in the u.s. china are up to 5% so that's why right now china continues to be so much of the growth look at tesla. we think going into next year, that's 40% of deliveries for tesla. a big part of the bull thesis, along with what we're seeing in some of the domestic plays, nio and others in china. it's an arms race in china, but we are starting to see the u.s. now really start to get some sea legs toward this green tidal wave >> okay, so you have thrown out a couple names here. where specifically do you see opportunity for investors to play this? >> i think it's a basket way to play tesla continues to be in my view the best way to play the chinese
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market i think a little bit of a sort of stumble this quarter early on, but we think next few years that's going to be a massive market opportunity it's part of our bullish thesis on tesla $1,000 price target i look at nio, xping, two domestic plays and ways to play the chinese market, and one that's a little bit of a surprise is gm if you look at gm, what they're doing over the next decade, china is going to be a key market, they're going after an ev, and it's part of the green tidal wave not just the oems ways to play it, its really across the whole supply chain we're in the second inning of what i view as the fourth industrial revolution playing out. >> sounds like we have a long way to go, second inning dan ives, thank you for joining us >> from cars to casinos, could an investment opportunity lie in macao? as gambling begins to slowly pick back umin china, and which stocks stand to benefit the most here to help us break it down, david katz, who covers the
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global gaming leisure and lodging industries david, what's the state of macao right now? we have the delta variant raring its ugly head, but it sounds like things are starting to pick back up as it pertains to gambling in macao. >> i appreciate you having me. and the answer to your question is, things have recovered very slowly, surprisingly slowly. so far, the market is down 65% year to date, july is running so far down 73% versus 2019 normalized levels. you know, visitation has started to pick up month on month, but it's still 75% of where it was in 2019. you know, we do cover these globally i speak with my colleagues every monday morning, and we publish commentary on macao, and we have started to refer to it as our weekly staring contest quite frankly, in a big surprise, as i said, asia has,
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macao has recovered much more slowly than what we're seeing in the domestic gaming markets. >> is there opportunity in a staring contest? is it prudent to make a move in this market right now? >> somebody always wins in a staring contest and somebody always loses we have continued to keep our positive rating on las vegas bets it has not performed well over the last quarter at all. we picked it because of its strong capital position. strong exposure to the recovery that has been slow in coming the issue i think really with the talk is despite the strong capital position that's about to get stronger in las vegas, it really hasn't defined where they're heading since the passing of mr. addleson. they haven't defined what to do with their strong capital position of a couple billion on the balance sheet, $6 billion more on its way in the door once they do a close on venetian.
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so i think some of that uncertainty has weighed on the stock as well as the very slow recovery that's really not showing meaningful signs of improvement. >> what do you think it would take for that recovery to really ramp back up again is it the issue of the variants or something else going on >> it's not the variants per se. it is the travel restrictions that are in place in getting into macao the mainland china has improved just a little bit over the past week or so we're now a negative test result as well as seven days of medical observation is what's required and that has shifted compared to hong kong and taiwan, where they're still 14 and 21 days of quarantine required to enter macao. so the travel restrictions have really made visitation severely constrained. and therefore, the revenues can't really follow. and so i think just safety, security, and access to the
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market is what it would take for the recovery to start to gain meaningful steam >> of course, we have been talking about regulation for the entire hour, but that is certainly the case in macao, too, with oversight being stepped up in that region. is that a headwind for the industry there as well >> it absolutely is. so the vip business or the junket business has been a meaningful driver of volume in that market. but has encountered periodic crackdowns and under president xi, it's been much more severe that does not appear to be letting up we find that vip business to be in secular decline in the long term when you look at our estimates, they are a bit lower for wynn as a result of their higher exposure to the vip and regulation on it >> yeah, it's pretty remarkable, especially, you know, all of the other headwinds that are approaching macao right now with regards to the variant, with regards to the certain
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quarantine requirements over there. this is just one other thing that the area has to contend with thank you so much for joining us, david. we really appreciate it. that does it for us. thanks for watching. the news with shepard smith starts right now president biden says covid misinformation taking aim at the platforms that peddle it this is the news on cnbc mask mandates making a comeback the pandemic of the unvaccinated is here and the cdc is sounding the alarm. >> we're going to continue to see preventable cases, hospitalizations and sadly deaths among the unvaccinated. a trail of mass destruction after floods in europe homes destroyed,


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