tv Fast Money CNBC September 29, 2016 5:00pm-6:01pm EDT
also general support in the public, according to a recent survey of some kind of drug control pricing. i do think that's something that's at least an overhang on the group. >> we have time for a yes or no. >> it's politics. >> exactly. >> thanks for joining us. what a day here on "closing bell." "fast money" begins right now. "fast money" starts right now. overlooking new york city's times square. i'm melissa lee. tonight on "fast," stocks getting hammered today. so is wall street's biggest bull, tom lee, used the occasion to buy the dip. plus congress giving it to wells fargo ceo john stumpf on the hill today, but they had no problem taking his money. we'll tell you which representative took the most from the embattled bank.
and we'll tell you if this is the next no-touch sector for the rest of the year. first, the story of the day is shares of deutsche bank falling on a report that hedge funds are pulling their money from the beaten-down bank through their prime brokerage accounts. shares fell to an all-time low. financials went down along with it. the question is simple. is this shades of 2008 all over again or is this simply a problem with deutsche bank? first we want to go to kate kelly. >> reporter: melissa, good to be here. a number of issues plaguing deutsche bank, starting with the report that ten hedge funds were removing capital from the bank, presumably from their prime brokerage accounts but also through their derivatives positions that they had on. bloomberg mentioning three specific names. i can tell you now, i've spoken to someone familiar with the matter at capula investment management, a european fund managing $14 billion. they are definitely reducing the capital they have at deutsche bank, according to the person. however they do maintain a relationship with deutsche.
they have not bailed out altogether. so clearly they still have some faith in deutsche. another thing i want to mention, breaking news as well, a number of hedge funds that have client relationships there, it appears some of them are demanding triparty trading relationships with deutsche. what does this mean? this means they do not want to face deutsche as a credit counterparty on all of their trades. i don't have a sense of scope of this but i just hung up with unwith hedge fund manager who says we're asking a third party be the one to face us as a credit counterparty on trades and deutsche bank can be involved but we don't want to be directly exposed to them on some of these. clearly you're seeing behavior that we saw during the financial crisis when it came to bear stear stearns, to lehman, or even morgan stanley. i don't want to raise alarms, this is contained right now, it would seem. everyone i've talked to, melissa, still wants to do business with deutsche bank and they're figuring out ways to do that. however there is a lot of concern. >> we should note deutsche bank earlier today put out a statement for its part saying
that "we are confident that the vast majority of" their clients have a full understanding of their position. kate, what is at the heart of these moves in terms of concerns? >> reporter: i mean, obviously you have reports earlier this week that the justice department was looking for a $14 billion settlement from deutsche, deutsche saying even then there's no way we're going to pay that. and in that very sorry it said lower down, they bougthought 2 3 billion was the more reasonable payment for the issues in question. clearly there's a widespread there. >> it's a liquidity concern. >> reporter: right. i mean, obviously this is something they have to pay out quickly. and the question is can their balance sheet really sustain that. obviously they're also operating in a low growth environment within europe, in germany, which has seen its share of issues economically and the banking system. can their balance sheet sustain
this? what about the fact that some of these clients are getting concerned and pulling capital? the issue here, and we have to be mindful of this as well as part of the media is, how serious is the confidence loss? will it get worse? can it with contained? the bank says it can be contained and their clients understand the full picture. >> kate, when you talk about clients pulling capital, this is not regulatory capital. this doesn't affect deutsche's capital position when we think about it from their strength. this is customer capital, right? it isn't counted. i just want to be very clear, it's the same word and it's a scary word when you hear about a bank that's lost a ton of equity value. but that's not regulatory capital, right? >> reporter: right. but banks are still highly leveraged, right? if they have to give a hedge fund back money in a short period of time, next day, a week, what have you, they have to look to the cash they have on hand, and that could become an immediate issue. that was the financial crisis
scenario. we're obviously in a different world today, but that's where people get nervous. >> kate kelly with breaking news on deutsche bank, thank you. of course this was the story of the day. whether or not you believe this is a systemic risk or not systemic risk, it took the financials down. it took the markets down, selling begatt selling. >> let me make a really important point. if you prime broker there, the risk/reward from pulling your account is very small, right? you can go somewhere else. risk/reward from owning -- even if you believe deutsche bank, even if you do. it's very different for the equity, though, that's a very different equation. >> okay. it's a great point. the counterparty risk and whether you want to do deutsche as a counterparty is what it comes down to. this is where the lehman crisis becomes relevant. what karen is talking about, you may have heard of hypothecation,
having the bank reuse that collateral and pledge it away. again, there are risks, rehypothecation risks that could be out there. when you think about deutsche bank, just think about the various issues they've had with the regulators. they had a big scandal with their russian unit that went back to london a couple of months ago. it's not just a bad balance sheet, but you wonder about control. >> so i wonder, though, as we go into year-end, everybody has talked about a year-end rally, you start to limit where you're going to put that money, somewhat sectors. we had head wins for the biotech, then headwinds for the financials, then headwinds for the utilities. we're closer to a rate rising cycle than a rate lowering. then you add another layer. you add wells. now you add another layer of headwinds. so you get funneled into energy, maybe. that sold off along with
deutsche bank because it was risk off across the table. this puts into question for me any type of year-end rally. i do think ultimately they get bailed out. but i think it's a game where they'll try to have that 2 to $3 billion even lower. they're try to play a dangerous game. >> i worked at drexel, i started at '86. the lifeblood in this industry is having people that will trade and do business with you. when people start to pull back, you're effectively done. i'm not suggesting that's on the verge of happening, but that's one of the things that's being talked about right now, number one. i think collectively we've talked about deutsche bank, now it's becoming seemingly a household name. i'm not smart enough to know if this is somewhat systemic, if it's bear stearns or lehman. i also can't discount out of hand that it's not. i mean, there are clearly things going on with the largest derivatives book in the history of derivatives book. it gets scarier each day. >> what would you say about the
comparisons being made to 2008? just mentioning deutsche bank in the same sentence as a lehman or bear stearns, that sends shivers down most people's spines. >> i feel like it's very different. when you look at lehman, their issue was the level 3 book, bigger than their book value, they weren't marking it down, it was underwater for sure. and that risk was elsewhere at the time. this seems more unique to me. i understand you have giant derivatives book. other people are on other sides of that book. like, you know, aig. this was systemic everywhere. this feels more unique to me. not enough for me to say, you know what, high go and buy it. >> let's take a step back and say there's little to no impact on u.s. financials. could the impact just be the impact on the european banking system? we've got commerce bank announced it's suspending its dividend and cutting 20% of its workforce overnight.
we've got deutsche bank which is feeling some pressure here as well. could there be just a risk to europe and therefore a risk to us? >> no. >> it's contained to deutsche? >> i think too big to fail in the case of deutsche bank is too big to fail for everybody. i think you have a situation where one of the reasons why deutsche is getting badly hammered by u.s. regulators is because they've set up a very big business in this country. global cross payments means there's a lot of collateral damage here. again, we're talking about different things in terms of where we were with lehman brothers, although there's no question that the capital markets business of deutsche has them in a lot of different pies. >> i hate the risk to angela merkel. i don't like having her be put in a very vulnerable position, which this does. >> you mean having her not reelect reelected? >> yes. what does she do fell if deutsche bank needs to be saved. >> she's said she's not going to do it. and deutsche said they're not looking for a bailout. >> none of them say hey, we need a bailout, don't tell anyone. that very well could be true.
but i think angela merkel is a very stabilizing force, particularly in a profost-brexi world. >> she has to deal with it one way or the other. >> populism in germany is possibly a bigger issue than any other party in europe. her party just lost a huge regional election in berlin. >> you would say, let them go under. >> i think so. >> what is that impact? >> if that's what you think she's going to lean towards, because in fact politically it may be more important to look as if we're going to protect the people, even though protecting the people is probably bailing out this bank. it absolutely is. >> let's get to the decline in deutsche bank nearly a year ago. take a listen to our show last september. >> what i see is a double top. i see well-defined lows. and my bet is deutsche bank breaks. that's not good for banks.
that's not good for equities. biggest bank in europe. something's wrong. >> now, cornerstone macro's carter worth is back at the smart board. carter, now what do you see? >> probably the same thing, something's wrong. in your discussion, think about all the negatives that were discussed there. before we get to the charts, what makes someone taking all the facts, saying right now, i got to go out and get me some deutsche bank shares, that's the problem. i mean, it's all pretty grim. one could say it's an opportunity. i think the cautious money or the cagey money, either way, has to presume this goes lower. so long trying to get an easy way out or shorts trying to take advantage. here is the chart, blue line, the stock 600. index itself versus the bank index within the stock. so the s&p 500 of europe. we see the spread, obviously. i'm going to add deutsche bank. that's the same chart over five
years, and of course deutsche bank, which is a big part of this stock, considerably worse. let's pull it back a little further. here now is going back some 25 years. what's so remarkable of course is even as europe bounced, the banks are still at their crisis low. now, they haven't made a new low. guess which one has, of course? deutsche bank. it's well below its crisis low. banks in general at their crisis low. deutsche bank well below. i would just say something's wrong, has to be. how do you draw the lines? you can draw them a lot of different ways. i think optically, that's as good a way as any. we've broken down through the bottom of this. there's no telling how far it can go, including all the way. you know, these kinds of things have to be considered. just to put this in perspective, here we've got deutsche bank at $15 billion compared to jpmorgan, 237.
i mean, 15 versus those big banks. or how about some stocks in the s&p 500? deutsche bank at $15 billion is the same as a cosmetics company, same as vulcan materials, one semiconductor or people who make auto parts? that's not good. i think lower. >> so before you had some interesting terminology when you had the chart that indicated this wedge sort of getting to the point where we are now. you said it could go -- i think you said something like there's no telling how far it could go. what do you mean by that? >> meaning if you have a strike of buyers and you have people who are either forced to sell or want to sell, if can drop 6% in a day, why can't it drop 10? why can't it drop 6 and 6 and 6 day after day? why can't they get cut in half? anything is possible once you're in a position like this, whether it's the confidence that disappears, or just the fact that there's no one to take the
other side of a sell ticket. >> deutsche bank is now $15 billion in market cap or so. does this mean the european bank index can't go higher without deutsche bank? what's your verdict on that? >> remember, of course, that's a broad aggregate. it shows there too, if you were to look at that aggregate versus the u.s. bank index, the bkx, it tells a story as well. we're nowhere near lows. does this have a ripple effect for europe, for u.s. banks? what is it about anything i've said or your previous discussion that makes one want to buy deutsche bank or maybe buy credit suisse or anything that's maybe related in some form or fashion? >> all right, carter, thank you. carter worth. the man who called it right on deutsche bank a year ago. now what? >> brian kelly's been on this as well, now what? tim could speak about the dkx
better than me. that think topped out in 2015. if the dkx starts to roll over, that could be the tell for the broader market in the united states. tim might disagree. i think the dax is a big indicator. if the russell fails here, that's not a good sign. we absolutely in my opinion have to hold 2135 in the s&p 500. >> my short term view is not constructive. i think the quarter end tomorrow could be very sloppy based on upon sentiment right now. when i think about the s&p, this was a week where you should have seen a breakout. we didn't get it. we talked about this with jeffrey gundlach. i think this is a very, very difficult time for markets when you also weigh in the fact that you've got the volatility from the political sphere. it says to a lot of people i don't need to be fully vested here. when you think about how the european banks are acting, just because deutsche bank's got a
$15 billion market cap doesn't mean that that's necessarily accurate to what its value is. let's face it, it effectively has been nationalized or will be. that's the conversation we're having here. so if it was truly $15 billion stands on its own or deutsche bank walked in to get a mortgage at wells fargo, they would get turned down. >> they said get a credit card. they got 160 plus billion dollars of debt to their $15 billion of market cap. jeffrey gundlach of doubleline who we've had on this show has said deutsche bank will go lower until the european bank gets a bailout. if it gets lower and he's right, how much, karen, pressure on the u.s. financials? people can argue until they're blue in the face that there's no systemic risk. >> i mean, i don't think that this deutsche bank situation can exist that long, right? i think it needs to be fixed or addressed in a pretty significant way.
whether you're a highly leveraged financial institution like they all are, that's the nature of the structure, you don't have a lot of time. this is not like a retailer. people don't care if it's bankrupt or not, they'll shop there. up next, it bucked the downward trend today, we'll give you the name. plus a congressman giving it to wells fargo's ceo today, but they had no problem taking wells's campaign contributions. we'll tell you which representatives took the most money. later, stocks getting hit today. we'll tell you whether the biggest bull on the street, tom lee, is buying, when "fast money" returns. myygienist said the most raom tng.
she said i shod think of my teeth like an pl it could bher advice? outside not so great on the inside. use a tootaste and mouthwash that strengtns both. go pro with crest pro-heth advanced. it's uniquy formulated with acvestrength technology to strengthen teeth inside and is better at strengthening the outside than colgateotal. crest toothpaste and mouthwash makes my who mouth feel amazing. advance to healthierums and stronger teeth from day one. my check-up was great. crest. healthy, beautiful smiles for fe.
welcome back to "fast money." one dow stock held on to gains. caterpillar rallying 1% on the day, the best performing dow stock this year. quite the turnaround. if the global economy is so soft, why is the stock doing so well? guy? >> because people look at where can i find value in an environment where people are looking for valuation or people are looking for yield, i think they go to caterpillar for valuation. i think you made a great point,
started the year at $56 or so, trading in the 80s. that's a great run. go back a little bit, though. back, back. >> way back, wow. >> topped out 120 a few years ago. it's actually down 30% from its all time highs on a broader market take that's up significantly. yes, it's having a great year. it's more a function of people chasing names, and they chase themselves right into caterpillar. can the stock continue high here? probably. do i think people are getting ahead of themselves? absolutely. >> if you go back to where he said way, way, way back, 2014, cat was actually a leading indicator for china. it beat it by almost a year, when you saw it fall off the table. management told us they saw these global slowdowns on the brink where they thought china was going to be weak. you see a whiplash. it was punished, but china is not focused anymore, china has
rallied, so has cap. next, the iv seeing its worst day since september 9th. the hardest hit names. i'm melissa lee. you're watching "fast money." on cnbc. the people you do business with, if you're stealing them in 2011, a thousand people are fired for stealing, and what do you do? you don't fix the problem. >> would you believe that this man took over 12 grand from wells fargo? and you won't believe who else in congress took wells fargo's money. we'll reveal. plus -- >> the raging bull. let's hear it. >> tom lee. because wall street's biggest bull says today's te ae's sello your best chance to buy stocks. he'll tell us what he's looking at, when "fast money" returns. and i never get tired of it. are you entire prepared to retire? plan your never tiring retiring retired tires retirement
with e*trade. i'in vests and as a vested investor in vests i invest with e*trade, where instors can investigate and invest in vests... or not in vests. sign up at etrade.com and get up to six hundred dollars. well right now all our new plans come with no da overages. ...we'll finally be in control... and we're back... introducing new at&t plans with no data overage charges.
welcome back to "fast money." crude's highest close in a month comes 24 hours after opec members agreed to curb production in november. tim, where do you go from here? >> what we learn from saudi arabia is they have more concern about their fiscal deficit than we thought. it doesn't mean you have to go crazy and run these things, but a lot of people say what this is is fast forwarding the rebalancing process. paul wolf said every barrel you take out of the market now essentially leaves you short one barrel next year. that's part of the way you have to look at this. if this was just about supply/demand balance, what do you do here? i don't think you have to go in and buy oil. the integrated names to me are not terribly cheap.
it's the leveraged balance sheets that are getting higher. >> shell oil. >> hess. which is an integrated name but a more valuable balance sheet. >> i think 50, 55 has been the lid on oil. i think you'll see that come back into play. it's a different world than it was even six months ago, ultimately you sell the pop, it can go a little higher. next, stocks getting hit on the back of deutsche moving lower. tom lee joins us next. congress takes aim at wells fargo's ceo john stumpf. but they had no problem taking his money. which representatives took the most from the embattled bank and why now might be a good time to buy the stock.
welcome back to "fast money." stocks sinking today, dow dropping. deutsche bank hitting an all-time low sending shock waives throuwaves through the market. nasdaq is in the green, set for its best quarter since the end of 2013. coming up, wells fargo's john stumpf getting grilled by the house. but those same house members taking his money. plus biotech taking a hit, not just because of worries over a hillary clinton presidency. we'll tell you what has investors running scared. the dow fell triple budgdig ending the day lower by around 200 points. tom lee is the head of research at fundstrat.
tom, good to hear from you. >> people are worried about a lot of things, like the elections. today was deutsche bank. investors basically are negative. we've got sentiment working in our favor. the underlying fundamentals remain strong, best expressed by how well high yield has been trading. we would be buying. >> in terms of deutsche bank, what do you think about what you saw in today's session in terms of the impact deutsche bank had on the financials and on the broader market? this is something that's hard to handicap in terms of how bad it gets. >> that's right. on the one hand, it's understandable why investors, you know, always think about, you know, the daisy chain effect of some stress, in this case deutsche bank, constituency become a larger systematic issue. but when we sort of frame the issue as, deutsche bank has a settlement with the u.s. government, which is sizable, and it's this settlement that's creating concerns about, you know, the liquidity of deutsche
bank. it makes you wonder if this is a lot less of a structural problem than a type we saw in '08, when, you know, the issue of collateral became, because of the underlying collapse of the value of housing assets. >> it's karen. i ask you this all the time, and i preface it with, you've been right so far, good call. but what would make you change your mind, what would you need to see to change you're miyour mind? >> we're facing a situation which is if deutsche bank leads to a true seizing of credit markets and credit access and liquidity, then that itself, you know, because of the effect it would have on the underlying economy would drive us into a recession. that would be bearish. i think it's really early. i don't think it's actually proper for you to say this is the start of a huge financial
crisis stemming from deutsche bank. >> tom, something we've talked about on the desk, i don't know the answer so i'm asking you, the yield curve continues to flatten out, it's give or take 80 basis points, which clearly nobody seems to have an issue with and they've been right not to. but at what point do you get concerned? >> we watch the yield curve really carefully. we tend to look at the 1030, because it's really a measure of what your expected long term return on invested capital is. it's still 71 basis points, which over the last 60 years is considered quite steep. so today there's still pretty good incentives for businesses to borrow ten-year plus, invest the money, and earn a return because of the steepness of the curve. >> tom, we're going to leave there. thanks for phoning in, good to hear from you. >> i'm not adding.
but i'm not selling it all today, no. >> i think there's a couple of factors here. i think that the market, people that are looking at a massive pullback that's going to come from some global financial meltdown, i.e. deutsche bank, i think are going to be waiting a long time. i do think you're in a place where markets have had a pretty good run, volatility is still pinned pretty low. there's a number of events over the next two or three months. i don't think you have to do a whole lot here. this is absolutely a market that if you got to 20 1/4, you're probably buying it. >> what would you buy? >> the industrials right now are very interesting. i think also if you think of the impact of higher or stabilized oil, the airlines look great. even some of the shippers, they're starting to have pricing power. that's more important than anything. >> you're cautious. >> i am cautious.
i mean really selling anything, to karen's point. basically neutral on the market. you do think you can move lower. every time we thought the market was going to sell off, it has some sort of an underpinning in this marketplace. i think there's a vested interest in keeping the market where it is. if anywhere, we're sideways to lower. >> is the baby being thrown out with the bath water on the financials side? >> i guess we're having wells fargo next, but you've still got to avoid that. headlines continue to be bad. at a certain point i think mr. stumpf is going to have to step down. maybe that will be the time to buy the stocks. to answer your question, on days like today, look at stocks that did well. we mentioned a few yesterday. >> what also did well today, semi conductors, qualcomm and xpi are in potential talks for a $30 billion deal which could be
announced in the next two or three months. >> outside of financials, you have the stew for a cyclical rally. >> stew? >> because we need a little bit of everything here. so the question is, are financials being taken down with the bath water, as you say? there's a significant regulatory argument still hanging over the banks, that's only been heightened because of wells fargo. there are some good things in terms of market breadth. >> the problem with the semis is qualcomm sat out a little bit, now it's looking to acquire somebody else. nvidia is a great looking stock. i think the juice is really out. >> micron wasn't -- >> i think service to battered, it's a bad section versus dram. people are looking for that car, that smart home. still ahead, wells fargo hitting a two-year low as its ceo gets grilled on capitol hill. but some of the people doing the
grilling have actually been taking money from the bank. which ones? a special "fast money" report is next. plus disney and carnival are saying zika is not impacting their business. but could the worst be yet to come? we'll have the details. i'm only in my 60's. ve got a nice long life ahead. big plans. so when i founout dicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan.
[ male announcer ] if you're eligible for medicare, you may know only cove about0% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insance plan, insud by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, it helps pick up some ofhat medicareoesn't pay. anancould save you inut-of-pocket medical costs. to me, relatiohips matter. i've been with my doct for years. now i know i'lbe abl stick with him. [ male announcer ] with these types of plans, you'll be able to visit any doctor or hospital at accepts medicare patients. and virtually no referrals plus, ere needed.networks, call now and request this free decion guide toelp you better understand medicare... and which aarp medire supplement plan ght be best for you. there's a wide range to choe from. we love to travel -
and e's so much more to see. so we found a plan that can travel with us. anywhere in the country. [ male announcer ] in the millions of people whve already enrolled in the oy medicare supplemen insunce s endorsed by aarp, an organization serving the needs of people 50 andver for generations. rememberall medicare supplement insurance plans help cover what medicare doesn't pay. and could save you in out-of-pocket medical costs. call now to request ur free decision guide. and learn more about the kinds of plans that will be here for yo now - and down the road. i have a lifetime of experience. so i knohow important that is.
i am fully accountable for all unethical sales practices in our retail banking business. and i'm fully committed to fixing this issue, strengthening our culture and taking the necessary steps and actions to restore our customers' trust. >> that was wells fargo chairman and ceo john stumpf apologizing in front of the house armed services committee today. despite the contrition, congress didn't waste any time before raking the executive over the coles. take a listen to this exchange from democrat carolyn maloney of new york. >> did you dump the stock after you found out about the fraudulent accounts? because it seems that the timing is very, very suspicious. and it raises serious questions. >> here is another question. did congresswoman maloney take
donations from stumpf's firm? the answer is yes. last year she accepted $350,000 in contributions from finance and real estate sectors including $7500 from wells fargo, according to opensecre s opensecrets.org. here is congressman john duffy. >> banking is based on trust. i don't care if it's 10% or 1% or a half a percent of the people you're doing business with. if you're stealing them in 2011, a thousand people are fired for stealing, and what do you do? you don't fix the problem. >> here is the problem for duffy. last year he has received $12,500 from wells fargo. in fact a dozen members of the house financial services committee gladly took money from wells fargo and then questioned the ceo's practices today. overall wells fargo contributions totaled nearly
300,000 in the last year to the committee. this information also comes courtesy of open secret. is this all grandstanding? and if they are doing this to prove a point that they are not in the pockets of the financial industry, does that mean the problem goes away faster than we think? >> i think it is all grandstanding. they need to give that money back. i think this is all a lot of noise. but it's still going to cascade through the marketplace. we've talked about it real quick technically, 44 1/2 was the level from february 11th, was the level from june 27th. it traded below that today. i think you have to still wait a little bit further to buy wells fargo. >> karen made this point earlier. i don't want to steal from her -- >> but you're going to. >> she said basically today that it's identity theft. that's really what it is. i don't think it's grandstanding. i think this is something that believe it or not, they understand, and i think the
american public understands, much different than investment banks which gets really opaque and nobody but the people who work there understand. do i think it's grandstanding? no. should they give the money back? yes. they didn't know this was going on when they took the money, i don't have a problem with that. could this get worse? absolutely, yes. >> i was quoting maxine waters who say that. what was the george bush phrase, i misunder estimated the fallout from this. i think they've done a terrible job. when he says i'm accountable, what does accountable mean? >> right. >> right? so i think that we would all love to hear from warren buffett something more substantive but what he thinks. that's important to me as an investor. i don't own it. i probably would have bought it except they've been doing a bad job, really bad job, i think, handling this crisis. i don't think he helped himself at all today, clearly they were
out to make him bolook bad, it worked. >> karen, what do you think is the multiple this bank is supposed to trade at? historically it traded at 20% to its peers. it's traded 1 1/2 times tangible book. we're ultimately saying, has this bank been discounted enough. financially this bank is not only fine but they're so fine. they're going to pay 3.3% dividend yield, it's a rock solid balance sheet. some people might shop elsewhere for their next credit card. >> sales practices will be crimped. even in other banks. this is not even the same thing. there is going to be either incremental sales practices -- >> that and the unknown liabilities. to whom do they owe money now to right the ship, so to speak? the fired employees are now filing suit. people who's credit scores are endangered. there is uncertainty in the ceo suite too. that could be a positive thing.
>> it could be a positive because if someone else comes in, right, they can do the kitchen sink kind of thing. >> the kitchen sink is not that big. >> the kitchen sink is not that big. >> the credit score thing is huge. listen, again, if your credit score was impacted by this, i can't put a price tag on that. >> what if you have a mortgage that was 3.5% and now it's 3.75%? >> if states start to back away, part of their business is underwriting municipal bonds. it's one state now. other states may line up as well. >> do you believe congress people who took that money, granted they probably didn't know anything was going on, should they give it back? >> sthey shouldn't give it back we're in an election year, the money goes a long way. >> everybody in agreement? >> they should give the credit
cards back too. >> they didn't want them in the first place. still ahead, biotech is under pressure and traders are betting there's a one stock in that group about to tank. we've got the details, next. plus zika taking a toll on florida tourism and travel to florida. how bad could it get? the details later this hour. you're watching "fast money" on cnbc, first in business worldwide.
welcome back to "fast money." the government extended money to fight the zika virus. how is that affecting the lucrative travel business? susan, you're looking at florida. >> florida, the epicenter of the zika outbreak and the epicenter here in the u.s. it's the second most visited state in america. in august the cdc slapped a travel warning on miami beach, the wynnewood area. the first major report looks at zika's impact on the travel industry, showing that the sunshine state is feeling the effects. we found for the peak travel season of fall and wind, americans booked 30% fewer flies to miami, 33 fewer to tampa, 15% fewer to palm beach.
the ceo of the miami conventions bureau told me they've seen some cancellations of future bookings in late 2016 and 2017, but those are mostly small hotel groups and no one so far has cancelled at the miami convention center which will still host the event in december that attracts the elites. disney says they haven't seen any impact on future bookings. cruise lines also operate out of miami, carnival's ceo saying this week the zika effect has not really impacted them. and the caribbean has in fact outperformed last quarter. last week the cdc removed its travel advisory to the north miami neighborhood of wynnewood after no new cases of zika were reported in the last 45 days. this is what a survey of travelers pointed out, they say maybe the situation on the ground might make travelers
reconsider their florida travel plans for september, october. back to you. >> thank you, susan lee. you were saying you like airlines and transport, this doesn't concern you at all. >> no, i like cruise lines, too. carnival just had numbers at second quarter. i know it's a horrific disease that seems to be still in the phase where we really don't know the next phase of it. but every time this has been an opportunity to buy. >> the problem is rcl and ccl have not admitted that zika even enters into the calculus. i think jetblue was the only one who said they saw any type of impact. >> why do they have to admit it? they're saying there's no impact. that's what they're seeing. >> i get it. >> we heard from carnival's ceo i don't really th earlier this week, he says there's no impact. >> if there's 30% less flights
to miami, somebody is being impacted. disney will be impacted. if congress gets together, and they won't, to fund a cure for this -- >> if disney doesn't cover its you know what -- >> zika, all kinds of -- >> they said there was ebola, we had a flu, now there will always be something. >> you believe what they're saying is? >> they don't care if there's an impact because they'll say it's a transitory. >> that's good news. >> these stocks have all been beaten down. if you don't see any progress in fighting zika, these stocks go further. >> i think royal caribbean goes higher. i don't get on cruise ships for a lot of reasons. seasickness, the clientele. shore about that. >> you don't play shuffleboard? >> i don't play shuffleboard.
you had a great interview with the rcl ceo a couple of weeks ago. look at what the stock has done. >> biostocks taking a beating sinking off the open, closing down 3%. the group under pressure as california proposes a drug price relief act to curb the high cost of drugs after mylan's epipen controversy. you're taking a look at biotech stocks, karen. >> hillary clinton wrote an op-ed where she talked about medicare needing to take care of drug prices. that's what i attribute this selloff to, that's a giant headwind. if hillary wins and she's able to do that. >> in terms of the downdrafts we saw in today's session, mylan and valeant. >> mylan takes a fresh leg
lower. we were trying to look at the limitations of what this meant in terms of revenues, 10, 15%. and actually it's about the residual damage. i don't think you go near it. >> i don't think there's any way to value if what karen said is true. you can't value what the real cost is, what the real benefits are going forward for the whole space. 290 was a technical support level. we broke through that. >> part of this is also your belief in what the markets are going to do, correct? if you believe even deutsche bank is going to create a risk off environment, this is not going to be a sector that's going to remain unscathed. >> to your point, obviously you have to believe in a broader market at a certain point. i still think -- listen, i hear what karen said, she made a great point. but ibb 285 is the line that's in. i was wrong about mylan, it felt like it made the turn, was trading north of 43 bucks, this
is the next leg down. if you think the worst case is 40% to earnings next year, slap a -- put an 8 or 9 value on this stock and you still should be in the high, the mid- to high $40 for myl. options traders are cautious about one biotechnology stock in particular. which one? mike has more. >> unlike my lan, teva pharmaceuticals has a prolonged headwind. as cheap as this stock is, trading eight times earnings, option traders traded several times the volume. we saw the january 45 puts, they were paying $2 for those. over 2,000 traded. i think they're probably insuring their positions against a potential move even further to the downside, below 43 by january expiration, would be a decline of about 6.5%. if you're long the stock, trading eight times earnings, even with expensing puts, it
might make sense because they have a lot of pressure. >> mike cohen, thank you. for more options action, check out the full show every friday. coming up on "mad money" tonight, from bulky servers to the internet of things, cisco systems and the transition into the future of tech, straight ahead. the ceo of cisco systems on "mad" tonight. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, ere you can share sttegies, to ideas, even actual tradesoms with market profesonals and t? i know. your brain told my brain before you told my face. mmm, blueberry? tap into thenoedge of her traders on thinkorswim. only at td ameritrade.
time for the final trade. tim seymour. >> happy wedding anniversary to my beautiful wife. [ applause ] >> 11 years. >> i thought it was three months ago. >> dividend stocks. the names of these that have a turnaround story are there. >> good work. i like dsw. some headwinds facing it for sure, online, not so much in athletics. great management. >> would you say these are uncertain times? >> sure. >> gdx for uncertain times. gdx is the ticker. >> what if i said no? >> then it's not gdx. >> you have to give it to lee.