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tv   Fast Money  CNBC  May 24, 2016 5:00pm-6:01pm EDT

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to throw it away. >> it makes me very nervous in the kitchen. we're out of time. can you throw a key word our way? >> follow-through. >> oil inventories. >> i love you guys. stephanie, michael. that does it for "closing bell." "fast money" begins now. "fast money" starts right now. live in the nasdaq market site over times square, i'm melissa lee. tonight on fast, missed today's rally? one of the most widely followed strategist on wall street, why the s&p could rally another 10% from here. the latest round of funding valuing snapchat a reported $22 billion. is the company on the path to become the next facebook or twitter. and later, is the market worried about a potential donald trump presidency. the possibility has got traders passing around one scary chart.
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first we start off with the market, stocks surging today, posting their best gains since mid-march. rallying by more than 1%. here's what was really interesting. stocks rallied along with the dollar, along with crude, while we watch bonds sell off. are we finally breaking out of the range and it is now time to finally give up that bear suit? biggest bear on the desk, b.k. >> oh, me? >> you and your bear suit. >> first of all the answer is absolutely not. primarily because b.k.'s not in the habit of buying into a major monetary policy mistake. if the fed raises rates, it's going to be a huge problem. this is a one day event. we were down the other day. we've gone nowhere. the one thing i will say that concerns me from the bearish side is everybody seems to be bearish at this point in time. you could get this fomo rally. that's the one thing that concerns me. beyond that, nothing's changed fundamentally.
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we had horrible industrial numbers today. the dollar is rising. if the fed raises rates, the dollar will continue to rise. so for me, no change in my view. >> what is different is the rotation that we've seen. bears like you, b.k., you pointed to the fact that we have the rally in energy, in materials, sort of junk rally leading the way. now we've got technology. >> technology. >> financials. >> financials. health care. we're starting to see the paper flows into the right sectors that you'd want to see. i understand where b.k.'s coming from. pause quite honestly, we're still within the range. we've been in a very tight race for a very long time. volatility, absolutely crushed. there are reasons why you can sort of understand right now why you might start to look at this thing in a somewhat bearish way. on the other side of things, though, technology started moving about a week and a half ago. two weeks ago. smh is pushing toward 56. look at some of the chip names. suddenly you get the extra little boost because of apple and some of the story lines of
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yesterday. then it's the financials today. whether or not that means that people are starting to buy into the idea of a rate hike, maybe they think the curve might not be as flat as everybody expects, whatever the case, i'm just saying that at least today we did see the financials start to get a lot of -- >> where do you stand on this whole thing? >> i tend to be more bullish. but it's the names i tend to like, too. cisco rallied today. i look at salesforce. i like both those two names. i look at the names that are actually working and who produced when it kams to earnings season. >> relative to the overall market, if you look at the s&p 500, it's less than 3% from the all-time highs. i'm looking at the nasdaq, down 7% from the 52-week highs. russell 2,000 down 12%. b.k., to your point, the s&p is still in a downtrend here. i don't think you have to unzip anything until you see a solid move above 2100 in the s&p and establishing a new base. you also need to see --
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>> don't you like the rotation, though? that they're going from the dash for cash -- >> in the last year and a half, that's all we've had is a bunch of rotations out of this sector, into that. where has it gotten us? the s&p 500 is in the exact same spot it was 18 months ago. and here's the biggest thing. >> isn't that bearish? you're attacking it more from the bearish side than the consolidated side. >> it is bearish when you think where we are in the whole rate cycle, where you think about the moves to the upside. we've only gotten these bounces off of sharp declines. we've not seen acceleration from highs to new highs. that to me is very poor. and we've seen breadth that has been weakening. the prior leaders are not doing the heavy lift i right now. >> energy continues to move higher. which is in the bull camp, right? in the bear camp, one of the best two-year auctions. one of the best two-year auctions we've had in quite some time. which somewhat counterintuitive given that the fact that
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everybody thinks we're going to see a rate hike. the chip move started with inindividualia inindividualia -- invidia a couple of weeks ago. apple news yesterday is helping. we've talked about oled university. there's something for everybody absolutely without question. i can see what b.k. is saying, and dan is saying and pete is saying. but we find ourselves exactly where we've been for quite some time in the s&p. >> where do you stand on it then? >> look, i still think the yield curve is flattening out. it is flattening, no denying it. the summer of 2007, i don't think that's particularly bullish. i think the market is saying, rates are being raised because the economy's getting better, which is why you're seeing -- >> do you have to go with the market or -- >> if you don't go with the market, you get run over. at a certain point, though, your thesis will be right or wrong. >> but let's be clear.
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you don't have to trend the s&p 500. there's 9,000 stocks out there. there's multiple different asset classes. for me, the easiest way to play this, if you think the fed is going to raise rates, why not just buy the dollar. that seems to be the no-brainer trade out there for me. i don't have to worry about earnings are going to be. >> so you buy the dollar. does that mean the gold trade is over? guy, does that mean the gold miners are over? >> the last week it indicated the gold trade is over. i don't think the gold and dollar are linked anymore. it has been for the last week so i've been wrong, absolutely. but i think at a certain point the gold bulls will win out. it's starting to upset me a little bit, but i don't think you can -- you have to are bearish gold if you're bullish the dollar. >> the gold and the dollar rise together under one very unique circumstance, when the fed is raising rates, and inflation expectations are rising. that's exactly the scenario we have right now. >> that relationship broke down
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over the past week. >> i'm talking 90-day correlations. rolling 90-day correlation. you know, if it happens for a quarter, maybe i'll change my mind. >> the s&p is going to rally 10% from here says our next guest. edgar joins us on the fast line. ed, what do you see that the guys here on the desk aren't seeing? >> the recession around the corner, i don't see it. bear markets generally anticipate recessions. remember how panicky everybody was at the beginning of the year. mid-february, we made an important low. and back then i was on one of your programs, and suggested the market could be up 10%. i didn't think it would be up 10% in two months, but that's what it did. you know, the bottom line here is, even if the fed goes in june, we're still talking about historically extremely low interest rates.
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i do think that the dollar is going to continue to strengthen. i do think some of the panic, concerns about commodity markets were overdone at the beginning of the year. believe it or not, the earnings picture is starting to improve. i think what's been under the radar screen here is, we've come out of the latest earnings season with the numbers revised up going into the rest of the year and next year. not because things are going to get a lot better, i think it's because we've been too pessimistic at the beginning of the year. >> but the lack of the recession around the corner does not equal the s&p 500 going up 10%. what are the conditions you need to see in order for you to stand by that 10% gain? >> if we're not going into recession, i don't think we'll go into a coma here. i think the economy will continue to grow and i think earnings will -- my 10% target is for the middle of next year. basically a year from now. over this year period i think earnings could grow 6%, 7%.
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i think global revenues can grow to that amount. i'm not expecting the profit margin to go down. i think it will stay around here. a garden variety scenario. it's actually the most likely scenario if you don't think there's going to be a recession. >> so you're talking about fundamental inputs here. obviously if the fed were to raise and continue to raise throughout the course of 2016, some of the fundamental aspects may be challenged, right? i look at your blog, it's fantastic. you have a lot of charts on there. we were talking about the s&p. there are other things to trade other than the s&p. but i make the point that the s&p is the best performing, also the largest. everything else really acts like garbage, when you think how far off of the 52-week highs the dax is, nikkei, shanghai, that kind of thing. >> transportation stocks, too. >> right. when i look at the s&p, i see a rolling top. i see two consecutive lower
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lows, con sec tef lower highs. i see the february high, i see the first lower low that existed since the entire rally started in march of 2009. to me the technical setup looks kind of treacherous. >> i appreciate what you're saying. some of my best friends are technicians. but i will say when you look at charts, you're almost assuming it's the same people that are driving the charts. i think what's really changing this bull market is the key players have been central banks in cahoots with corporate finance managers. corporate finance managers have been buying back their shares, have been buying other companies. i know there's controversy about that, whether that continues or not. but i think with bond yields worldwide, likely to say low with the ecb buying corporate bonds, i think you'll continue to see buybacks in m & as. >> thank you, ed. faung for phoning in. what do you make of ed's thesis? >> that's the thesis, to the people that have had it, they've
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had it right. they accept the little move in february. companies buy back their shares. i'll say this, everybody should watch sanzel this morning on squawk. he made interesting cogent points. one thing he did say is he doesn't understand the negative interest rates and he doesn't understand how it all ends well. i encourage people to listen to what he had to say. shares of hewlett-packard enterprise surging on news of a spin-off. and an unlikely strategy that is paying off big-time for investors. david faber will join us for a special report. is snapchat on its way to be the next facebook or twitter. and later, just how worried is the market about a potential donald trump presidency? the answer lies in one chart that could be signaling big trouble ahead for stocks. we'll explain when "fast money" returns. we call it dark data.
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news of a spin-off and merger, could the move signal bigger isn't necessarily better when it comes to meg whitman's company. david faber has all the details
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back at headquarters. >> melissa, that's right. hewlett-packard enterprises, news of the deal, a spin-off of the enterprise services business and merge it with csc. you can see hewlett-packard up over 10% for its part csc up over 23%. you can see it right there. the deal itself is being structured as a merger of equals and structured as tax-free to hewlett-packard shareholders. it will combine a company with some $26 billion in revenues. and owned 50/50, 50% by hpe shareholders and 50% by the existing shareholders already of csc. as part of the deal, the combined company will pay a $1.5 billion dividend to hpe, and presumably $2.5 billion worth of liabilities.
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they're getting the $8.5 billion number, the value that they in the negotiations they've had with csc put on the enterprise services business. once it's jettisoned, hp itself will be a smaller company. on the conference call, meg wittman was talking about that future for that company and what will be left of hewlett-packard enterprise. >> for the remaining hewlett-packard enterprise, this transaction creates significant incremental value. by unlocking a faster growing, higher margin and stronger free cash flow business. hpers will now have $33 billion in annual revenue and will focus on software infrastructure that leverages a world class platform. >> there you have it. that is what hpe will be once this deal is completed. that is quite some time from now. we're talking about the end of march and 2017.
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given the consolidation many are forecasting in this area, you never know if this is a possibility of somebody trying to jump the deal. given the performance of csors stock prices, it makes it less likely. you're talking about a global player now in enterprise services in a big way. that is what they were hoping for. certainly when they draw up these kind of merger vehicles in a somewhat complex deal, they're looking for that kind of response in the marketplace. perhaps it took a little while. of course, it is after hours. but that is quite a move for both stocks at this point. and what's left of hpe is $33 billion, largely the enterprise group itself. it had a pretty good quarter overall. 10% out of the enterprise group, 10% constant currency revenue growth for that unit. >> david, in the release they said this is the next logical step in the turn-around. what is the next step then? is it hpe, the smaller company remains independent?
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walk me through the way the chess pieces might move. >> that's a great question. by the way, i'll put it to meg whitman tomorrow morning when she joins us on "squawk on the street." we've been having a conversation that's gone on for years. we talk every quarter, and in between. she's talked so much about how quickly the world is moving and how she needs more focus. that really does seem to be kind of the strategy she's followed, by pairing this company down to a manageable size. $33 billion is a fairly large company in terms of annual revenues. but it's focused now. she's certainly happy about the quarter they just reported, pointing to some of the decisions she made years ago. including increasing r & d spending and saying they're starting to come to fruition. >> david, it seems like it shores up their balance sheet a little bit. i think they'll buy back stock, but does this allow them to make an acquisition that would make sense given the size of their
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company? >> they said previously as well, guy, that they might be considering something like that, or certainly it was part of the strategy, once they did the split. and you're right, they're going to be buying back as much -- they have an authorization for as much as $4.8 billion in. they weren't buying back stocks during this ka quarter because they were negotiating the deal. that's a lot. when you're talking about a $30 million market value, how much can they conceivably free the float. your point is a good one. i don't know what the strategy is. but it would certainly seem a possibility. >> david, thanks so much. we look forward to the interview with meg whitman tomorrow morning. what do you make of the stocks? acting as if it's the best thing since sliced bread. >> now you have more clarity about their business, and what meg has envisioned it sounds like for years. if you want to extrapolate this somewhere else, you look at the work she's done in the last five years, look at ibm. they've lost basically $37
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billion in sales off their peak. 107 in 2011 to expected 80 this year. what is going on over there. they had the big clunky thing. when you look at what she's done, you say to yourself, how is that board not looking at hp saying what in the heck are we doing over here. >> steve, where would you stand on this? >> i think you make a good point. we all look to ibm because we're all curious about it. what's the board see and what is the plan there. it looks like hp wants to put all growth in one area. to your point, guy, do they want to use the balance sheet to be able to make some kind of an acquisition. there are plenty of acquisitions out there. who knows what direction she really wants to bring this thing. so i don't know anything specific right now. but i think it's an interesting thing. she's obviously focused on growth. and are they looking for security. where would she want to go, that would make sense to me. >> buyer of the new company or hpe? >> i would be buyer hpe. but i would want to trade for a
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bit. >> still ahead, the lucrative world of esports. what is three-time nba champion fox saying the space could be offering up the next big sports gold mine. find out where hoe's pe's putti money to work right now. here's what else is coming up on fast. >> america, this man is getting closer to being your next president. >> my new game is trump, the game. >> the game where you deal for everything you've ever wanted to own. >> if history is any indication, it could mean a big move is in store for stocks. we'll explain. plus, a new report valuing snapchat at $22 billion. legendary investor will tell us if it's the next facebook or twitter when "fast money" returns.
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we've got breaking news on monsanto. let's go back to david fabe >> i didn't have to leave here. we want to tell people, we've gotten a statement from buyer, this responding to monsanto's rejection earlier today, $122 all cash offer to buy that company. bayer saying we're pleased the shares are released from the substantial benefits it can provide. we're confident they can address any potential financing of regulatory matters. most importantly the company looks forward to engaging in constructive discussions with mon sapto. as we pointed out earlier, monsanto's rejection is the best people could hope for, including bayer, because it didn't of any concerns on regulatory. price was the key issue. it said, monsanto looks forward
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to discussing the deal. it does appear the two sides are moving towards what would seem to be a potential negotiation here to see if they can get something done at a price that is met with approval by monsanto's board of directors. >> you would read constructive meaning they're willing to raise the price? >> yeah. this is about price. if they can get to it, it would seem, bayer will be in a position to buy monsanto. monsanto not bringing up those kinds of things if you were pursuing a strategy to make sure it was anybody but bayer, or anybody at all you want it to be sold to. >> david, thank you. two-fer from david faber. dan? >> three times average daily volume. one of the things that's interesting, one trader expressed a view in the options market that basically said that that refuse wal was nothing more than posturing. today when the stock was 109. there was a seller of 5,000, the october 92 1/2 puts all the way
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to the down side. they used some of the proceeds to buy 5,000 of the october, 110-125 call spread. that position cost them $3. about $1.5 billion in premium. the worst case scenario the trader is basically put 500,000 shares of stock on the october expiration down at 92 1/2. or they have long exposure from 113 up to 125. there's a couple interesting things about this trade and why it may work out. when you look at chart right here, $95 is basically this gap level from when the rumors started a couple of weeks ago. and 125 when you look at this, this is basically the 352-week high. you could say maybe these guys are looking to have a price that matches that. i just want to make one point. why do they sell a put and buy a call spread? they end up being short two options in the trade structure. look what's happening to the options in monsanto since the rumors started. shot up to two-year highs here. this is a scenario that if
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you're uncertain about what's going to take place, you have conviction, you want to look to mitigate the decay of the options. >> check out the full show at 5:30 p.m. eastern time on friday. coming up next, snapchat's valuation is the wildly popular and fast scoring mobile app. quickly becoming the next facebook or twitter? one of the original investors in facebook will weigh in. later, the booming business of esports and what has some analysts saying it could soon be a $2 billion industry in just a few years. julia boorstin has the special report. (politely) wait, wait, wait! you can't put it in like...
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don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. welcome back to "fast money." a huge rally on the street today. the dow soaring more than 200 points. the nasdaq up 2%. with today's gains, the s&p and nasdaq now positive for the month of may. here's what's coming up in the
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second half of "fast money." as donald trump moves closer to officially clinching the republican nomination, we've got the shocking chart that says a president trump could be big trouble for the markets. it's got nothing to do with humorous policies. we'll explain. plus, the video game industry is exploding. we'll tell you why it could become a $2 billion gold mine sooner than you think. that's later on. but first, we start off with snapchat, now worth more than $20 billion. according to a new report by tech crunch. that puts it in line of the company of the elite companies out there. for more on this, let's go to the guy who is priceless in our estimation, dominic chu. hi, dom. >> you know why i love being a part of "fast money," melissa? because you guys always make me feel like i'm in a mastercard commercial. all kidding aside, that rare company is the likes of large cap private companies like uber, air b and b. when it comes to the world of
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hot social media companies, snapchat is the latest one to grab those headlines. two others are public, of course. but it's been like a tale of two stocks. best of times and worst of times. here's what we're talking about, melissa. let's start with twitter, which did hit a record low in trading today. when it first came to market, expectations were very high. and back then it had a valuation of around $14 billion at its ipo price. after a lot of user growth, and perhaps some monetization concerns, the market value today, it's closer to around $9.6 billion. has it gotten low enough to perhaps attract deep value investors? big question there. then there's facebook, which is a few percentage points away from a record high. it went public with around $104 billion valuation. and it's more than tripled that since then. that divergence, melissa, is just one of the things that some traders are wondering about, especially when it comes to private company valuations like the ones we're seeing with
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snapchat. food for thought in the world of privatizations. >> we bring in tech investing legend, roger, who was one of the first investors in facebook. roger, always great to see you. >> it's good to be here, melissa. how are you? >> it great, thank you. more like twitter or facebook? >> well, there are a lot of things that have to happen before we know for certain. i would say at this time it looks more like twitter than facebook. the reason for that is simple. facebook had a user interface and experience that did lend itself to advertising. twitter, by contrast, was more like the ticker at the bottom of the cnbc page, where you were trying to insert advertisements into a fast moving stream. and that just -- it's a very hard experience for advertisers and for consumers. i think snapchat is somewhere in between the two. i'm really impressed pi their
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early work in mon eteization, with their discover feature, and now some of the things they're doing with sponsorship of what they call lenses, which are the filters they apply to various videos. i think those are really good. i like them better than the early work that we saw at twitter. keep in mind, if the valuation is really 20 to $22 billion, they're going to need to grow really rapidly to get into that valuation. i think the reason they got it is very simple. supply and demand. there just are not very many fast growing companies out there at the scale they're at. there's snapchat, and i think the other one would be the people who make the gift keyboard. they're also growing like crazy. and there's so few of those today, that i think investors who need to be in that space don't have a lot of alternatives. you have to pay the price. >> roger, it's dan. wouldn't you say there's some scarcity value in what snapchat has been able to achieve in
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video views? estimates of $10 billion a day, more than what facebook is doing. when you talk about monetization, that is the step forward for facebook and twitter. and these guys are already in the lead. >> to be clear, facebook's monetization of video i think is well, well ahead. and the trick here is with a ten-second limit on the videos, you're going to have a more -- let's put it this way, you'll have to be more creative. you'll have to create a new form of advertising. i do think that's possible. i think they showed with the sponsorship things they're doing around lenses and the channels they've created in discover, i think there's more than one way to monetize snapchat. when you have that level of engagement, the future is bright. the question is, what's the right price to pay for it. i look at this and i go, i think this is -- the price is the price because there are not a lot of substitutes. whether people are going to make money from this price will be determined by how successful they are at converting that opportunity into revenues and those revenues into profits.
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it's really early in the game. the estimates i've seen are they're doing revenues around $100 million this year. that's a big gap to $22 billion. >> roger, it sounds like you would not yourself be an investor in snapchat because you think the valuation is exceeding what it should be, given its growth rate. where do you stand on twitter seeing it's at a new low at this point? is that undervalued? >> let me clarify on snapchat just so i'm clear. it's not the right deal for me. but that doesn't mean it's not going to work. just my risk tolerance right now doesn't go so far as to go to where snapchat is. but i'm really impressed by what they're doing and i hope they're successful. with twitter, that's a hard situation. the stock is coming down to a territory where to me it gets really interesting. i have not made a purchase yet. i'm really intrigued by what they're doing with the nfl. it's not enough to save the company, but it may offer a new platform, a new way of
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monetizing that realistically is going to be infinitely more successful than the things they've been doing. if there were enough event based video products they could get involved in, you could see twitter being a really interesting stock. no question the product is great. >> but even at a new low, a new all-time low in the stock, it's still not enough for you? >> that makes it more interesting to me, not less. i'm a value investor in this environment. remember, right now, i like apple. because the stock has a 2.5% yield and it's trading at ten times earnings. so to me, when you can get apple at that valuation, how much risk do you want to take. because i don't think this is going to be a big product cycle time for tech. i think we're kind of between the big things. and there will be a lot of interesting stuff. but it will be kind of oneoff. against that context, the lower twitter goes, the more interested i am. >> okay. roger, thank you. tech investing legend, of course. >> great hair.
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>> yes. >> amongst many other things. >> good quality. >> dan's going to disagree with me and he's probably going to be right, but the reason i continue to own facebook, facebook is so far ahead of the curve with all this stuff, it just -- every time you see a valuation like snapchat is supposedly getting, more reason to be bullish. >> look at snapchat's valuation a few months ago. it's up 30% more. it's pretty incredible. fast growing is great. that was something roger pointed out, fast growing. but monetization, that's the problem with twitter right now. they're the bottom ticker. they're not like facebook. to guy's point, if you want to be involved right now, you want to probably be in facebook just because of all the acquisitions that are made that they're starting to see the monetization come to fruition. a $22 billion valuation? holy smokes. >> for twitter, all-time low today. downgraded to a sell. but there's not only user fatigue amongst the reasons why,
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but advertiser fatigue out there these days. >> right. what they're doing is not working right now. that's extraordinarily clear. do you buy it as an investor? not until you see some movement in the right direction. i don't know if it will be this next deal -- but you could see it rally, come back 5%, then i might get interested. but until you see momentum on, hey, this is how it's going to change, i think it's out of touch. >> still ahead, the hillary clinton and donald trump showdown is heating up. which candidate would sink the market. the shocking chart you need to see next. jeffrey gun gundlach ahead. y compromise, businesses need the agility to do one thing & another. only at&t has the network, people, and partners to help companies be... local & global.
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welcome back to "fast money." republican voters are casting their ballots tonight in washington state, and the last presidential primary of the month. john harwood is in d.c. with the latest. john. >> melissa, only republicans voting tonight. no suspense in the republican contest because donald trump doesn't have opponents anymore. but he's taking one more step to something few in politics ever expected he could do, and that is clinch the republican nomination. let's look at the delegate count. donald trump has got 1,171
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delegates by the tally of nbc news. he needs 1,237 to be nominated. he's not going to get there tonight. only 44 delegates at stake in washington. but he's very closely getting toward the point where he will be the actual republican nominee. now, that has consequences. if you look at the poll numbers, you'll see what the consequences are. they are that donald trump has consolidated his party as the presumptive nominee. and drawn even, even slightly ahead of hillary clinton in the average of polls on the real clear website. hillary clinton, of course, is still bogged down in her primary fight against bernie sanders. until she wraps up her nomination, we won't get a true picture of the race. but right now, donald trump is very competitive with hillary clinton. and in our nbc "wall street journal" poll, we show clinton three points ahead. there are other polls that have shown donald trump leading. this is a horse race and democrats are red identification
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for it. republicans are pleasantly surprised right now, guys. >> as the race for the white house heats up, one online market shows trump might be more trouble for stocks than previously thought. paul is the co-founder of a group that joins us here on the sit. here's what you're seeing from the iowa electronics market. >> this is actually people betting. iowa is a very extreme example. but hillary was all but a certainty, or democratic candidate to win the presidency less than a month ago. and 74%, it's down to 58% today. to be fair, other polls haven't -- and betting markets haven't shown that extreme of a decline. another popular one she's dropped from just under 75% to 66%. she's come down a bit. trump, again, is still behind at 29%. but the gap is narrowing. what john was saying before,
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what anyone thought was impossible a few weeks ago, is less and less unlikely now. still a little bit unlikely. question is, why are we focusing on this, and if you look at this chart, the democratic nomination versus the s&p 500, up until two weeks ago they were tracking each other very closely. the notion that the market, for now, would prefer a democratic nominee being hillary clinton, because she's more predictable, and history has shown that under democratic presidents, this goes back to the 1900s, pretty big sample size there, the dow has seen an annualized gain of 8.9% under democratic presidents, and 3.8% for republicans. so there's a big disparity there. >> this is during their whole term? >> yes. so the annualized returns,
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anytime a democrat has been in the presidency, is 8.9% annualized. if you add up all those periods, versus republicans, 3.9%. >> extrapolate all this data. connect the dots for us. you're saying it's more and more likely that a republican will win, or the odds are increasing -- >> the gap is narrowing. >> so that that's a probability of that 3 whatever percent gain under a republican presidency is going higher as opposed to the almost 9% gain of a democrat. >> yes. you look at the democratic presidents. only two democrats have seen down administrations for the dow. and in each one, the annualized gain was less than 1%. that was wilson and carter. the history at least shows where things stand. and the markets tend to prefer democratic candidates. as someone much smarter than me
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once said, if ydemocrats are better for the market. >> what do you think of this historical data? >> iowa in particular, it can be manipulated. not a very thick market. it has been rumored it's been manipulated in the past. i would say just be careful in making investment decisions on this. >> i would run the risk that, i think that trump's going to lose some steam in the fall. i think the risk becomes what happens to congress. and i think if it starts to look like a runaway for the democrats, then you have a different scenario. i think right now we're focused on trump. but i think he has a potential to do a lot more damage to the party. and their aspirations to keep what they have in the fall. >> still ahead, the biggest competition in sports, moving from the field to the screen. we'll tell you why the next gold mine for the sport isn't what you think. show me movies with romance.
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show me more like this. show me "previously watched."
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what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity.
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it's more than a nit's reliable uptime. and multi-layered security. it's how you stay connected to each other and to your customers. with centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services - all with dedicated, responsive support. with centurylink as your trusted technology partner, you're free to focus on growing your business. centurylink. your link to what's next. we have a news alert on jeff gundlach. >> the ceo of double line capital overseeing $75 billion,
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being reported by reuters that gundlach said the stock market is dead money in his words. he says this week's rally so far feels more like a short squeeze to him. he said the stock market is not incredibly healthy. he's still predicting a 50/50 chance of a june rate hike by the federal reserve. we should point out that gundlach at the end of april, just about a month ago, he suggested that helicopter money drop could be the next fiscal stimulus move for the u.s. economy. looks like a big reversal there. >> thank you, susan. i'm not going to go to you, or you. it is music to your ears when you hear jeff say it's a short squeeze, the markets are not healthy. >> somewhat. i can't believe you used the expression short squeeze. where did we see the rally today? we saw it in low valuations in terms of tech and in the financials. those are the two leadership areas. i don't know. it sure doesn't feel like that
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to me. it feels like a rotation. the grinding of the s&p. that's still in place. but it doesn't feel like anything like a short squeeze. this was not a dash for trash kind of a rally we saw today. >> dead money, stock markets dead money? >> i understand he's saying there are risks to both sides. i think -- i don't want to say he used the term incorrectly. i wouldn't have used that term. i think people are chasing. if you want to call it a short squeeze that's fine. but i think his bond position has stayed the same. he thinks yields are going lower. i do as well. >> esports, believe it or not, over 220 million people like to watch other people play video games. yeah, you heard that right. they like to watch people pray video games. julia boorstin joins us with look at who is cashing in. julia? >> well, melissa, those numbers are pretty amazing, aren't they. what's amazing is that esports is not just for teenagers streaming video on twitter or
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youtube. it's ready for primetime. today kicks off the first tournament by eleague, a partnership between turner, owned by time warner, as well as agent wee. in front of live audiences in atlanta, it will air on tbs on friday. turner plans to broadcast on television this year. chasing a younger demographic, desirable for advertisers, also branching off from turner's reliance of traditional tv content. >> not only does it offer legitimacy for the hard-core fan, but it also opens the door for a casual fan. and the potential to grow the audience. >> former nba player said this tv tournament is a turning point. another way esports teams can cash in on the booming business. >> your ticket sales, your media rights, sponsorship, and
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merchandising, all the ancillary and traditional ways you would see a professional sporting franchise capitalize on their investment. >> now the eleague sponsor includes arby's, coca-cola an ongoing partner of league of legends competition. the ceo of the immortals team said esports has a big advantage. >> i think what a lot of brands are realizing is if you're trying to reach an 18 to 34-year-old male demographic, it's this or netflix. and netflix doesn't sell advertising. >> esports is projected to grow a $1.9 billion business by the year 2018. that's 250% growth over just three years. melissa? >> julia, how many people watch this? >> 220 million people are esports fans. they watch. they watch people play video games. a lot of that is on twitch. which amazon bought nearly two years ago for about $1 billion. a lot of that is on youtube.
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youtube has been investing a lot in this space. >> you've seen this i assume. is it exciting? >> you know, i don't think i'm the target demographic. and what's most amazing is that i've seen some of the competitions in real life. i've seen people -- i've gone to some of these competitions. and i went to the world of war craft 1 last fall. i showed up expecting it to be, you know, the early phase of the competition, expecting it to be more on a stage. but it was a bunch of people playing video games in front of monitors. it's just a whole new world. >> okay. julia, thank you. julia boorstin, fascinating story. pete, i'll go to you because -- >> really? >> you played real sports. >> this is different. this is something -- >> but the demographic is very interesting. >> you can understand at least they're attacking the right demographic. talk about $1.9 billion. all of that is incredible to me. i would be curious about the crowd, the world of war craft.
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got to wonder a little bit. what do you think? >> i don't see anything wrong with world of war craft. >> my favorite game. these cats definitely need help getting dates. i'm just saying. think about it. i'm putting it out there. >> driving lamb bower gorghinisg paid big money to play these. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade. t-mobile is going big for small business. you'll never get charged data overages, ever. get your own 24 / 7 dedicated business account team.
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"final trade" time. >> a shout-out to my son today, track and field. way to go, big boy. fire eye, keep an eye on it. i think it's going higher. >> if you're expecting volatility, one is the exchanges, cme. you get a nice dividend, too. >> risk reversal. >> yeah. b.k. wants to buy the hp if it breaks out. between 17, 18. i think this deal will keep a bit under the shares here. i think it breaks out. >> are you going to check out twitch this weekend? >> i'm on twitch already. it's one of my favorite applications on my phone. >> i'll tell you something, you know what else i'm going to do? >> what? >> what do they do? >> what? >> netflix and chill.
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>> i don't know about the chill part, but netflix. i don't know where your head's at, sister. >> i'm melissa. "mad money" with jim cramer starts right now."mad money wit starts right now. my in addition is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you find it. mad money starts now. >> hey, i'm kramer. welcome to mad money. welcome to cramerica. call me at 1-800-743-cnbc. talk about out of nowhere, this rally seems to have snuck up on us


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