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tv   Fast Money  CNBC  May 20, 2016 5:00pm-5:31pm EDT

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like we're on this -- it's between two dramatically different outcomes. >> i don't think -- it won't end well. >> we have fed speak next week. all these issues will be wrapped into it. >> that's true. thank you for joining us here. that does it for "closing bell." "fast money" begins now. >> happy friday. "fast money" does start right now. i'm me less a lee. tim, david, brian and guy are here with me. the biggest bull in the man who called the bottom in february. says investors are missing their best chance to buy stocks. tell us what has him so bullish. the very same names that hedge fepds are betting will collapse, and we'll give you the names. shares of footlocker are tumbling today. it could spell serious trouble for nike. we can tell you how to profit. we start off with an interesting development in the market. the names that have been outperforming, taking on the chin today.
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mcdonald's, take a look at this, the worst performing stock of the dow. campbell's soup taking 6%. the stock is up 14% on the year. pepsi also seeing big losses. the names that were the winners year-to-date are now the names it seems people are rushing out of. the hottest trades of the year now cooling off? what is it telling us about the market we're in, guy? >> i think what it says is these stocks have outperformed because there's a smaller and smaller group doing well. now people may be feeling a little more comfortable with the broader market. they're taking profits in the names that have been great. and they're broadening out. you saw it today with the semiconductors. stock was up 14%. but these tech stocks specifically some of these semis have been doing really well. they've come back with a vengeance. i happen to think when you
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outlined at the top of the show was actually good for the broader market. >> although, if the reason these are selling off is because you're getting a stronger dollar and getting higher rates, that's not going to be good for the broader market in my view. this could be the first signal of it. you look at names like pepsi and campbell's pork and beans, and even proctor & gamble -- >> old school. >> he's 73 years old, for crying out loud. >> my point being, these are multi-national companies, decent dividend yields. and they're going to be -- >> but you're -- people are chasing yield. it's $1. they got caught offguard thinking there would be no move in december, or no earlier than december. they got caught offguard with the fed. look at the russell 2. the russell 2 for the year is basically down 2%. you've got all these big dividend stocks. all of them up roughly, a group of them up roughly 8% for the year. you're going to see that come together. the russell 2 rally, i can
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guarantee you, and i can tell you that these names are going to continue on this line. >> yeah, first of all, i'm short the russell. but back to what guy said, the russell moved 1.6% today. totally outperformed which tells you it's a market where small cap, maybe even credit is doing better. within two days, the dollar has suddenly now reborn. suddenly they're falling under the weight of a stronger dollar. >> the dollar has had a three-week run here. >> we've seen the shift in other sectors. this is a complete complacency trade. people were come place enlt the fed wasn't going to move. they're coming out. it's really that straightforward. >> what i would say is if you run too far away from these trades, the personal care, the hpc, anything, beverages, i think you're running away from a trade that will do well all year. >> you still want to be in them?
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>> yes. the same things that people have been arguing on this desk for the last three or four months are very much intact. if anything, brian is saying he thinks the multi-nationals, a headwind from the dollar, but the same factors that had the people running for defensive names. >> you're outlining the beginning of the rotation this week. more broadly, not even semis, take a look at technology. the naz dasdaq up in a single d. would you be onboard? >> that's the rub. let's go back to the russell. i don't think it's broken out to the upside at all. tim happens to be right. i think it's still in a downtrend from the middle of 2015. for me to get bullish, it has to close above 115. i still think it's on a downtrend. i think people are feeling a little better about things. whether that's right or wrong remains to be seen. >> but that's what seems like -- >> i agree with you. what's odd is, they feel better about financials, because they
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think for some reason rising rates are going to be good for the financials. i disagree with that. but that seems to be what's going on. whether it makes sense or not, we can argue about. but i think that's what's happening. >> i think it's interesting of the wednesday reaction in the markets, the one that's really held on is the bid to the financials because people think the fed is moving faster. we talked about this on wednesday. to get excited about a yield curve that is much worse than where we were, i go wack to say este lauder, pepsi, these are names that are giving you significant growth. the fact that mcdonald's is weaker today is not an indictment against mcdonald's. it's the best performing stock in the dow over the last 12 months. no wonder people are taking -- >> hence the reason you sell the stock. investors are apathetic about mcdonald's right now. they're basically saying, what's next. we've basically rode this trade, not seeing it to the upside. they move to other things.
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smaller cap names are distress sgld they're able to put on risk in this environment? >> we're looking for the next opportunity. >> they are willing to put on risk? >> they have to move into something. >> this market is basically going nowhere. nothing really happened. but underneath, there are a lot of big moves out there. there's money to be made if you're on the right side of these. maybe they have the rotation in some of these names. maybe retail is set for a bounce. i wouldn't be buying it. certainly those are the places that i would look, rather than being -- rather than trying to buy pepsi or campbell's pork and beans on lows. >> 23 times is where mcdonald's is trading right now. the same multiple the stock was trading from 2002 to 2012 when they were killing it. that is the top -- >> wouldn't you want to buy the best names in the group -- >> look, i think as you just said -- >> okay. >> the institutions have turned around on this story. they absolutely -- >> apathetic to the story.
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they've made the money, the move's occurred, we are basically done with it. >> let me put the question the other day. let's say investors want to get rid of the top performing, quote unquote, safety plays. what we saw in today's sessions is interesting. within technology we had the old guard tech names. with dividend yields, trade very well. cisco, microsoft, apple for the week, a great week. >> microsoft, you've got a significant sell-off in microsoft. i think microsoft's playing catch-up. intel is riding on the back of what amad said, i think. ibm is sort of treading water here which is interesting. apple is a completely different animal. everything you just mentioned i can explain. back to the top of the show, i think people are just feeling better about things, which is why they're getting out of a small group of stocks and sort of dipping their toe into a bigger pool. whether they should be or not is a completely different conversation. but that's what's going on, i think. >> there is skepticism about that premise.
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there are opportunities here to trade against what has happened this week. and in today's market. >> yeah, so i would be selling names like proctor & gamble. of all of them, the one i would probably be short aggressively. >> i actually fall somewhere in the middle. i think this -- a bit of a change in tone going on here. i don't think the dollar is going a lot higher. i do think the fed could move. a lot of places in the commodity sector and emerging markets have made this adjustment. when i look at the moves from wednesday to today, a lot of these guys have come back and built a base. that's the weakness i would be buying. >> one top strategist thinks the negativity in the markets is way overdone. let's bring in tom lee, global adviser. tom is one of the street's biggest bulls. predicted the s&p 500 will be 12% higher by year's end. tom, great to have you with us. >> thanks for having me here. >> why does wall street have it
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so wrong right now? >> well, you know, i think there's a lot of skepticism, and a lot of things to be worried about. if we look back at the last 35 years, or 50 years, you know, the equity markets typically take their direction from what's going on in credit. especially in high yield. there's a lot of bullish development in the eye yield market. on track to be up 12% this year. the s&p has never had a down year when high yields had a double-digit year. >> what are the big sectors investors are really getting wrong, really discounting? >> i think there's two big story lines this year. i think a lot of it you guys were talking about. the first, the dollar hasn't finished as strong as people thought. it's triggering a pretty good rotation. because there's revisions with most nationals. there's this global search for carry. i think it's really playing out most strongly in the energy,
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materials, and industrial space. there have been huge moves in credit. the materials, contracts are back to 2012 levels, yet at 2015 lows. oil is up $9 from where it was in december. yet earnings revisions in energy have been flat. we pushed that up to just the four integrateds in the s&p 500s from just the $9 move in oil. $2.60 per s&p share. >> tom, brian kelly. i'm curious, hyg, tremendous outflows this week. lqd had a terrible week. big amounts of bonds coming to the market. a bond binge, if you will. if those rates go higher, does that turn you bearish? >> it might. but you know, one thing you have to keep in mind that's in the bigger picture, there's a global search for carry going on. the net supply of u.s. corporate and government bonds this year is exactly zero.
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1.1 trillion of bonds issued this year. but there's 1.1 trillion in interest intake. money's coming in from asia and europe. that's going to keep driving spreads lower. you might have one or two weeks where these are widening. but i think the trend is for credit spreads to tighten. >> all right. tom, we're going to leave it there. thank you for phoning in. >> thank you. >> tom lee at fundstrat. >> i think it's a little bit scary right now. you look at put call, the expiration we just had. funds are rolling their protection. there's funds rolling protection. a little nervousness out there, no doubt about it. but upside calls are incredibly cheap right now. which tells you that this market, nobody's anticipating for a real runaway to the up side. it scares me from the perspective that we could drift higher, and we will probably drift a little higher, because everybody gets the timing wrong simply for that fact, because
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nobody expects the market to move to the upside. if we move significantly higher, i think the market is to sell. >> talking about high yield, we had the wonky options guys on this show. >> i don't know, about -- >> at any rate. he outlined an hyg put trade, extraordinarily bearish. what mike and dana has been talking about has all come to fruition. we'll see if they're right in hyg. >> you could make an argument you're seeing the credit conditions get to a place we're talking about a fed hike in the last couple of days. we went from a 4% probability of a fed hike in june to almost 30 in the last couple days. people clearly feel better about what will happen when the fed starts to hike. and high yield before, two, three months ago, everybody pointing out including our friend from bank of america, we've never seen the fed hike --
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energy has been a self-feeding element for the banks and rest of the market. that is possibly very real. >> up next, retail wreck. not so much. we'll tell you why the bottom could be in for the trade. shaping up to be quite the rainy weekend. we've got four long-term stocks you can put away for a rainy day. the most widely owned stocks are the ones hedge funds are betting. the names you could own. [engine revving] [engine revving] [phone buzzing] ♪ some things are simply impossible to ignore. the strikingly designed lexus nx turbo and hybrid. the suv that dares to go beyond utility.
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welcome back to "fast money." a brutal week for retails. take a look at this. the s&p etf actually ending the week in positive territory, putting an end to a four-week losing streak. so, is the bottom finally in for retail? steve. >> absolutely not. any of these mall based names, stay completely far away from. the tx maxx, the discount places, i would stick in and buy. but frankly, am a zn. amazon is the only game in town right now. stick with your amazon trade. i hear people talk about valuation, i totally get that.
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but growth managers are sticking with this trade. they'll be the number one -- i'm sorry, the apparel player, two consumables player in 2018, eating the lunch of target, walmart, going after walgreens, cvs, all these apparel names. they are going to really -- >> but the same thing that was going on in the consumer trade. this is an expensive company. we know why it's outperforming. >> i'll give you an example. look at the pile-on trade nike. that stock's not going to go much lower. i know food locker and the basketball comments they made about the softness and what have you, nike's going to be a stock people want to own. they'll continue to gravitate to that name. it will be range-bound for a little while, no question. but a stock like under armour, they're at real risk here. they miss one quarter it's a problem. that's the name that people are gog to bail out of. >> here's the thing about retail. here's what you need to watch.
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retail could bounce here. you want to have a trade, go for it. but i would watch am a sob. here's why. you can explain away all the weakness in the retail earnings by saying, oh, amazon's eating their lunch. it's all going online. if amazon stumbles at all, then you know we've got a problem with the consumer. but until that happens -- >> every single -- >> i'm saying as an indicator. i'm not saying it is. >> the weakness in the consumer and consumer spending has not been all about amazon. only spending it on housing and autos. the consumer is saving more money because they're not feeling comfortable about their job security and wages. macy's, we've seen this before, don't necessarily sell bk's money to do that. or maybe -- >> i would. >> maybe you would. >> i still would. >> this is a -- almost a 5% dividend yield right now for a company that has an enormous amount of their balance sheet in cash. bad news is priced in. >> i think an interesting chart
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is home depot after earnings. it hasn't recovered its losses. >> no. the quarter was outstanding. >> exactly. >> the price was actually lousy. good news, bad price action, doesn't particularly bode well. i still think home depot is a great stock and a great company. gap stores, i know where jean will be tomorrow -- >> going to the gap? >> no. >> bringing it back, wise guy. when they come back -- >> just saying. >> tim has a bunch in his closet. you mentioned auto sales. car troubles, more strain on the consumers. there's a growing number of people who owe more on their car than it's actually worth. they're underwater on their car. almost a third of u.s. vehicles traded in this year were underwater marking the largest increase since the financial crisis. the auto sector could be looking a lot like retail? >> when you look at the inventories, inventories in
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retail coming into this earnings season, they're 20-year highs in retail. autos, 20-year highs in varies. you have the two lines. you better sell an awful lot of cars. you hear the anecdotal evidence that the discounts are out there. they are selling some of those cars. but stories like this, where you're saying, you know what, used cars are below their value. you're starting to see delinquencies tick up. autos have been a big part of this recovery. that's an awful lot of inventory for us to work off. i would be very cautious. >> auto stocks have been dogs, though. how do you express this trade? is it a bank stock? or lenders? >> carmax. short carmax. >> coming up next, four stocks that goldman said hedge funds are betting the most against. we've got the names. and why goldman might be getting one of them very wrong. i'm melissa lee and you're watching "fast money" on cnbc. here's what else is coming up on fast. >> we'll give you more than
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that, mick, because we've got the ultimate safety trade. and it won't cost you much. we'll explain. plus, it's the contrary indicator that could be signaling a top to the market. we'll tell you what it is and how you can profit. when "fast money" returns.
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welcome back to "fast money." i'm dominic chu here at the new york stock exchange. something that has the traders talking today is the latest report from goldman sachs about the most important short positions among hedge funds. they focused specifically on the short side of the equation. goldman has a list of stocks that it estimates has the highest dollar value of short interest in it. now, they exclude stocks that
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are among already the biggest hedge fund long positions. they also exclude stocks at excessively high levels of short interest already. among the top stocks in this list of, quote, important short positions, among hedgies, you've got names like walmart, also netflix, exxon mobil and disney as well. now, the analyst team there notes that the stocks on this short position list are not derived from regulatory filings like the 13-fs, or how popular a short position is. rather, it's goals to be short holdings on edge funds. and put together as a possible list to the goldman list of important long hedge fund positions. melissa, a little bit of food for thought on how traders are possibly positioning on the short side of things. back over to you guys, uptown, at the nasdaq market site. >> thank you, dom. have a great weekend. all right. so he outlined some of the vip shorts. >> which is the best one, which
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i'd be most scared of. >> both. >> the best short has been netflix. tim's been talking about this for a long time. the stock has not traded well. i'm a believer. i've been wrong. i think the dids in i one is clearly working out. walmart i don't get. you see what happened this week. you get your face ripped off. the risk reward for me in walmart doesn't set up very well. >> i think of walmart, they beat yesterday, the expectations are still really low. it's in the structural secular thing. they're losing on price advantage and losing to online. if you're betting on everything that happened this week in retail, walmart has the biggest target on their back of any of these guys. what can you buy that you can't quickly press a button and get cheaper. >> 50% of their business is groceries. amazon is going after it. it will take them a little more time. they're already taking on the apparel side. i think walmart's actually a trade here. i think you can go to 70
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bucks -- >> you got the tie at walmart, right? >> ah! just kidding. >> you've been in his bedroom? >> oh, mel! >> atta girl! >> i'm supposed to sit here and take it? come on. if you're on the east coast, you're in for some wet, gloomy wet weather this weekend. what stocks would you put away for a rainy day? >> rainy couple of years, frontier stocks, fm the ticker. good dividend yield. more growth there than anywhere else. >> i like johnson & johnson. very safe. they've got consumer products. and they've got some prescription products. i think it's a good buy here. >> put it away for a rainy day, gold. people go into gold when things get bad. >> i hope the options actions cast don't mail it in, this is a fast half hour. i'm throwing it out there. coca-cola gegts you done. i've got to tell you something.
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we're live at the nasdaq market site on a beautiful friday afternoon. the guys here are getting ready behind me. while they're doing that, take a look at what's coming up in the show. >> money's going to be huge! >> sure it's not the shoes? >> i'm sure. >> actually, it might be the shoes. it could be causing nike some problems. we'll explain. plus, it's a secret indicator that stocks may have hit a near term top. >> i can tell you, but then i'd have to kill you. >> no need for all that. we'll tell you what it is and how you can profit. and -- >> i could get cash for this gold medallion. >> you could. but we have a simpler way to make money on gold. and we'll show you


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