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tv   Fast Money  CNBC  January 15, 2016 5:00pm-5:31pm EST

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have a lot to go here. >> i think people prefer that comparison to the most recent crisis we've been through. if only better than 2007 and 2008. >> that is a great point. we are all forever going to be children of 2008 and 2009 just like my grandparents were children of the depression. that colored their view and we ask, is this systemic, is everything going to fail. it is never the same crisis twice. >> on that michelle, that does it for us on "closing bell." take it away. >> "fast money" starts right now. we are live from nasdaq overlooking times square. i'm michelle caruso-cabrera in for melissa lee. our traders, dan, steve, brian kelly and guy adami. hello, guy. >> hi. >> tonight on fast, the man who called the crash in august is back. he has an even more dire prediction. we'll hear from him in moments. and plus with this market turmoil are future rate hikes off the table this year.
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steve liesman will join us with a report. >> and walmart is warning the world. announcing a series of stunning layoffs and closures. why this will have a broader implication for the u.s. economy. but first we start with breaking news in the markets. at one point today the dow was down 537 points. the s&p has made a new low for the year and we are below the august flash crash lows on oil closing below $30 a barrel today. the question on investor's minds, what now? it guy, is there more to go? >> i believe there is. the good news and the bad news. the good news, we traded down to 1864. held and bounced and close add bove it. that is a good news item. it sets us up for a bounce on tuesday that probably nobody is expecting to see. with that said, there is absolutely structural damage that has been done to the market over the last couple of weeks. everybody has been saying, sell all rallies. i think that is still in place. i think we can bounce up to 1920
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in the s&p but i think you have to sell it if and when it gets there. >> beaker? >> i think you have to understand what has gone on in the broader market. we had china, which is an issue for most of the year and oil is an issue for most of the year and broad indexes like the russell and the transports have all been down and most stocks have been down. if the last two weeks, what has happened is the biggest indexes, the s&p 500, the nasdaq and the dow, have started to catch down to all of the other names. so there is still room to go. i still think we have to break the august lows in the bigger indices and then we'll have to see what the economy is doing. but the numbers we got today were terrible. it may suggestion we are already in a recession here in the u.s. >> steve grasso? >> everybody has complained -- or the bulls have said our economy is better than the rest of the world and we'll avoid a contagion. to b.k.'s point, i don't think our economy is as good as everyone thinks. we've seen the empire and manufacturing and everything
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come out at three-year lows basically. technically, challenged at best. 1864, let's use that guide number, 1820 was the october 2014 lows. so that was an intra day low. today we closed above that intra day low in august. i think it is not over yet. this was an options expiration going into the weekend. >> when you say economy, i've been watching the transports, it feels like forever, the economy is to great, the economy is so great so why are the transports down 30% when oil is low and the economy is supposedly good. sometimes markets are telling you something. dan, what do you think? >> for all intents and purposes we've been in an industrial recession for the last part of last year. i want to bring it back to china because i believe there is misinformation as to what people apply to investing and what is going on in our economy and our markets. listen, they told you last night, intel ceo, they said people on the ground are showing a lot of caution about what is
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going on in china. and a lot of times people are very quick to say, well that was just cautious guidance. they are sandbagging and this and that. and you have to go back and look at other crisis, this is 2007, john chambers then ceo of cisco in november of 200, before things got real, put his finger on the point. he said that financial institutions stop buying our stuff. auto companies stop buying our stuff. i think you should taken tell's cautious guidance for face value here and i think that this is a theme that we're going to see with u.s. multi-nationals in the reporting. >> anybody believe china is growing at 3.5%. >> no. there is a similarity between 2007 and 2008, what is going on in china. they are going through a deleveraging just like we did in 2008. it is bigger and they are doing a worse job of handling it. so this will go on longer. and they don't handle it correctly. so far it is hand fisted. if they don't handle it
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correctly, it will be worse. so people don't get too excited. banks are going to fail. that is not what i'm saying. they are deleveraging. the economy is be slower than 6%. who knows, it could grow at zero percent. >> and that is what the markets could tell us. what did anybody buy today? anything. >> the bond market is in play. >> you mean treasuries. >> tlt if you want a sim poll. a few years ago they sold off and yields went higher because i believe the china were selling them because it made sense in context but not in what is going on in the ground. yields are on either side of the 10% to the ten year and i think that trades down to 1 and a quarter. and november 2014 is when the transports topped out. the russell and iwm topped out this summer and they are catching up to what both of the markets have been telling you. >> and what is just as important, is what you bought today is what you didn't sell.
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so for me, instead of hadding to it, i need to see the market firm up, i look back to the august low and see where the stocks i'm holding were trading at. apple closed higher. it is right there. but closed higher. disney closed higher. i'm holding both of those. i need to see stability before i add to my positions. >> today's selloff felt bad. it was somewhat orderly and it wasn't panicky. and if you are a trader, you use this to take in shorts and take exposure off. you don't want to press a week like this that ends up like this into a three-day weekend. >> for a close. >> and i did cover some shorts. but throughout the week when things are dicey, i think you sell rallies and i think that will go on for the first quarter. i add on longs that we've been talking about, like utilities, verizon i did this week. >> how many yields are you getting? >> verizon is 5%. >> wow! >> and it has outperformed and
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so has the xlu. >> those are the opportunities in this type of market. if the market is going sideways or down further, as long as you could get some of the yields, there will be nice, juicy plays out there. i'm not in that camp yet. i did cover a few shorts in the energy sector, in particular in oil area. not to say that i think oil is stopping going down, but tuesday just risk-reward. my risk management said, take some off the table at this point in time. that being said, the one thing i did buy today was a little bit of silver. that is interesting, if you get any type of talk from the fed they may back down from the rate hikes, i think both silver and gold does well and silver probably outperforms. >> and bill is the short seller who correctly called the 2000 football crisis and before the flash crash he told us this. >> the market is uniquely crash-prone. i think the market is very brittle because of high frequency trading, etfs, a lot of momentum investors.
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i don't think there is going to be any painful back door. >> bill joins us on the "fast" line now. you sounded accurate then. what do you think after the selloff? is there more to go? >> yeah, you managed to pick a good sound bite when i sounded smart. i think, yes, in all seriousness, yes, i think there is much more to go. the exact path, we can debate. because none of us know. my real fear is that there is going to be a dislocation. i thought that for sometime for the reasons that you just reprized. >> what does that mean for the new viewer to cnbc, what is a dislocation? >> it means all of a sudden the market breaks hard and fast. that 5% in a day. 10% in three days. so far what we've had in the s&p this year has been kind of a rolling dislocation. i mean, the market has broken down substantially at a time of the year when the market goes up
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because of money flowing in. and in china, last summer, or last spring, they had a -- kind of like a crash, over a group of days. so i think it is entirely possible we could break these lows that we're sitting on from last summer and actually we got the one from year ago not too far below it and take them out and see if the market will go straight down 5% or 10% or something like that. market is going to accelerate as it goes lower, i believe, until such time as the fed panics and comes back and does the same thing it has been doing. and oh, by the way, don't work in the first place but that is a different issue. >> this morning on cnbc it was said that another 10% he thought also was possible. last time you were on you said you were shorting intel. >> that turned out to be great. did you cover that at all, like dan and b.k. did with short positions today or do you think there is more to go there too? >> there is more to go. i didn't cover it. because intel has been held up by the data center growth which is slowing drastically. and now -- and all of the four
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big data center players have all been cutting back on their spending. they just chose it last year. they have tons of capacity in place. if people start to wobble in their heads about what gdp growth will be like in the world and data centers slow, they are really in trouble. and they mentioned last night about china. and i think china came up with who said it and it was recently mentioned before i got on, china is a real wildcard. we monetized all of these bonds after the '08 crisis. they did the same thing with loans through the bank system. so china has a problem they are dealing with in trying to figure out how to unwind their leverage and not have the economy totally fall apart. and the world is weak already. so you have world equity markets that are under pressure and the world economy is weak. so it is a very potent mix at a moment in time when the fed can't rise to the rescue unless
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things go lower, so guess what. things go much lower. >> this is brian kelly here. there is question whether this selloff is due to the structural factors, the high frequently trading or etf or the fundamental factor that the world is slowing. where do you come down or is it a combination of both? >> brian, good question. first of all, the market -- my contention, when i was on the show last time, was that the mashlgt only went to -- market only went to 2100 because of q3. it ended and it took a year to peak out. so the monetization to drove the market to the moon is out of play. the amendment of gdp has washed through. the economy wasn't that great last year. the economy is going to get weaker because the financial markets are going to feedback into the economy. remember, it is the fed that tried to make the market go up to help the quote, unquote, portfolio balance channel. it
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will unbalance on the way down. so if -- if the economy wasn't weak and it hasn't been all of the problems that have been ignored for a group of years, you could say, well this is just a market correction. this is much bigger than a market correction. if we had an identifiable bubble rather than the quasibubble in treasuries like unicorns and other real estate and certain stocks, we would have one precise bubble and it was breaking, i would say there was no chance the economy doesn't get taken with it. so maybe the economy won't be as bad as i think, but i think it will be afeedback on the down side and make this worse. >> bill, good to have you on again. thank you for joining us. >> sorry to have all of that good news. >> i know. let's all good have a drink after this. what do you think? he agrees with you? >> we had an option expiration. and to dan's point, it was short recoverying, going into a
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three-day weekend. where if china comes out with -- everything they've done hasn't worked. i get that. but no one will take that risk when you had the market collapse the way it did. >> especially when it is closed on monday. >> there is tweaking that could go on that could have a rip your face off type rally that you better take now. >> our market palpitations have less to do with market and the shanghai and more with earnings and guidance. >> i disagree. >> when you look at intel down 9% and still 16% from the august lows here. >> we're not giving earnings the benefit of the doubt in the face of what we see from china but to me china is the biggest wildcard. >> hold that thought. coming up, after the worst start of the year even for stocks, are future rate hikes now off the table. special report on what investors are expecting the feds' next move to be. and what do intel, citi and
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jp morgan have in common? they have been hammered after earnings. what could it mean when earnings get into high gear next week. dan, that is why i cut you off. because that is where we are going. and disney and apple may have found a bottom. we'll reveal what the bulls are looking at later this hour. we're back after this. it started with a single connection. and the network was born. it soon grew from a luxury to a necessity.
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welcome back to "fast money." bill fleckenstein mentioned this in the last sect. take a look at the chart of the s&p 500 since the fed ended q3 in 2014, stocks basically stopped rallying. and since they did a quarter point raise in december, stocks have had the worst start ever to a new year. is this going to push the fed from raising rates or stop them from raising rates. steve leases miesman joins us. you did a crash -- >> if you put that chart up. >> put it up. >> you are a huge fan of the free market. >> yes. >> and according to bill's reason. and i have respect for him. it is not a forward discounting
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mechanism. the market only reacts to things after they have happened. so the fed coming through and telling you they will hike for a year has no effect on the market. only the fed actually hiking and something dawning on the market afterwards. i would like to believe that is true, because it is an easy and simple explanation. but it creates a theory there that there is no forward discounting mechanism to the market, no ability to price in future occurrences. but in our survey, which is what you were going to ask before, 79% of our respondents, we asked 33 people just today, economists, fund managers, what the fed next move is going to be, 79 say they will raise rates and 6%, none and 15% will lower rates. >> and i was going to say 6% say there is another round of quantitative easing. i know that is a small number. but the fact that people are thinking it that point is startling, right? >> sure.
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here is the debate. people like bill out there, smart guy and seed clearly and this road to less federal reserve stimulus and then the market going down and maybe going down a lot. and there are others in the -- the economists that i'm talking to that say you know what, this market decline is not in relationship to the wackness of the economy. we have had weakness in manufacturing but the consumer is doing well. big job gains in december. more americans working. 2.65 million americans working last year and you have lower prices coming so you should have better consumer spending out there and that is 70% of the economy. >> so if -- so you ask -- i think you asked about the probability of a recession, right. i look at what the markets are doing and i'm wondering, are the markets discounting in, telling us that there is a recession coming? >> so i think the markets are. but not our survey respondents. if you look, we have a 27 -- and i call it a 28% probability of a recession. how high is that. it is the third highest in our
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survey going back to 2011 when we first started asking this question. it has been as high as 36%. the previous one after that is 28.5% in december of 2012. that was connected to some of the high jinx going on in the government at the time. to look at the market, you would say recession is a centertainty. but in any given year there is one in five chance of a recession so this is higher than normal but not off the charts. >> steve liesman, thank you. what do you think? are they going to raise again? >> they may. but they are out of thur mind if they do. they were out of their mind to raise it the first time. >> so you were contrary to the vast majority of the contrast like steve liesman. >> because they have been wrong all year. i'm a trader. i'm wrong all of the time. but i also learn from my mistakes. >> they will raise sooner than they did. >> i didn't think they were. >> no, the economists. they thought they would raise them sooner. they were painted into a corner.
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they felt as if they had to raise. but the gap between short -- fed funds rate and ten-year is at all time historic lows compared to where they normally raise. it is half of what it is. >> if the fed signals they are not going to raise, does the market start rallying again? >> for a day. >> i don't know about that. maybe for a day or two. but i think they raised -- we'll have this debate forever. because they raised because they painted themselves into a corner. to respond to steve, he is not here but i will. the market has become paff loafy an, not forward-thinking and don't differentiate what the consumers want to spend with the health of consumer. they are two different things. the u.s. consumer has proved time over time as long as things look good, they will spend money. doesn't mean they should be. much different. coming up. shares of netflix are down 10% in 2016 ahead of the earnings report on tuesday. the traders will tell you whether it is a buy or a no-touch right after the break. you didn't think we would skip
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the fang stocks today. i'm michelle caruso-cabrera and you're watching cnbc. in the meantime, here is what else is coming up on "fast." >> houston, we have a problem. >> that is what traders are saying about walmart. after the company announces massive layoffs. and it could spell more trouble for the rally. we'll explain. plus, the man who called the bear market -- now sees something more troubling for stocks. he'll tell us what that is when "fast money" returns.
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welcome back to "fast money." netflix is reporting on tuesday. that stock getting hit today. it is down 9% year-to-date. do you buy into the earnings. dan? >> it is down bigger than nasdaq. it is down 24% from the all-time highs in november. but $100 is a massive level. i know guy thinks it is a decent level into the report. sentiment is not great. a lot of costs associated with the 130 country rollout so i think you wait until after the earnings or do so with defined risk. >> we've seen companies report good earnings and it didn't matter. it doesn't matter if they report a good number or is it that kind of market.
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>> well steve will tell you 75% of the stocks are correlated to s&p so today just about everything will go down. dan has been spot on. i've tried to remain a bull. i was wrong. $95 was the level mark cuban talked about this past summer. given the growth we've seen, it will surprise people to the upside. if i'm wrong, i will stand up to it. but i think you could own netflix. >> definitely. i think the international growth was the story everyone was waiting for and the rollout that dan spoke about in the opening statements, that is what people got bullish on and that is what you have to get bullish on. it is the international growth story. i understand it comes with costs. but they are way ahead of where it was forecast. >> but the dollar doing what it is doing -- >> i was going to say -- >> if the market does not trade higher, like guy said, there is nobody immune to the selloff. >> what if growth is far slower overseas than they thought and they don't get the pickup,
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period. >> it is competition period. >> you could go ahead and buy it but don't do it with my money. >> that does it for us here on "fast money." catch us here at 5:00 p.m. and don't move. because "options action" starts right after this break, in about six seconds. it's hard to find time to keep up on my shows.
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i have been all over the world for cnbc but i have not been here. hosting "options action." the guys are getting ready for the show. while they are doing that, here is what is coming up. >> that sums up how our traders feel. but if you are worried about more losses, relax. we'll tell you how to protect your portfolio. plus -- >> off their her head. >> that is what investors have done with shares of disney. but the stock may have found a bottom. and we'll tell what you the bulls are looking at. and -- including the


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