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tv   Fast Money  CNBC  May 16, 2016 5:00pm-6:01pm EDT

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some more institutional practices. there's more on the spark at spark. >> who wrote that? kelly evans wrote that. >> there she is. dennis, mike thank you so much for joining us. "fast money" begins right now. "fast money" does start right now. i'm melissa lee. traders on the desk are tim, karen, steve and pete. tonight on fast noted investors raul paul is back. he's been waiting all year to get toward the market. he just did it. why now? he's here to explain. berkshire's $1 billion bet on apple. if history is any indication buffett buffett's bets don't always turn out for the best. we'll discuss that. first, we start off with a rally. while everyone was obsessing over berkshire's latest buy, what really drove the market today is what's been driving it
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all year long. that is a rally of energy and materials. this was called the dash for trash trade. is it now the global recovery trade. >> it's the global reflation trade. whether it means the world's okay or not, i think are two different questions. whether these things were oversold or not is part of the story. the fact that i think commodities have put their bottom end, and that's -- i'm not going to hedge it saying it depends on what the dollar does. we come to a place where a lot of supplies have been taken offline. you've taken a lot of supply in the oil space. you've got bankruptcies. places that things that people wanted to see you have the ridge count numbers, doha collapsed, and here you have oil. i think it's telling you that we're in a place where a lot of the trades are getting back to a place where i think you're starting to see a bottom. it doesn't mean that the world is a whole lot better. in the case of volatility these
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are still names, folks, you better be very careful. these are names that are a huge move. >> was the rally more believable or less believable because it seemed to be led by oil? energy stocks -- >> we have the canadian fires, nigeria, we have goldman basically reversing their oil position. but to tim's point, i don't think the globe is any better off than we were. >> why is the disruption of supply now working in the oil space? >> i don't think it's really working. i guess if i finish my thought, i would think that if this was working, it would be 65 bid. i think it's a lackluster performance, based on supply issues based on canadian buyers. i think it should be traded at 65 85 95. it can't even bypass 50. >> in terms of the supply disruptions, the outages and disruptions are the highest since may of 2010. so in the past much greater
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than it has been in the past year. >> these are real. in fact there's a story that you have 2 million barrels shut in. bankruptcies these are things people wanted to hear. there's pain in this space. it's playing out right now. >> it is a positioning thing. it's not going over 50 is a real problem. >> to me, if you step back a little bit, not even that far, just retrace a tiny bit of the last couple of weeks, very rocky. i don't think anything has really changed today. oil's volatile. i don't think anything's changed. i feel like we're exactly where we were last week. >> we had a nice gain in energy stocks, material stocks and technology. apple. all of its suppliers leading the chips higher. >> it feels like it's a little bit different. if we go past this earnings and look throughout the earnings cycle and look at apple's earnings and now that apple has adjusted down significantly, the
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news comes down buffett is positioning in there, at least berkshire is and we get all excited about it. oil has been going lock step for the most part with the market. there are days every once in a while a guy will say, oil was down today and the market's up. i will say in gem, look where oil is and you can tell where the market's going to be. oil had another great day, significantly higher near $48 a barrel. it's been in this range, kind of pushing up and the range is going to continue to move up the ladder. i think that's what makes this interesting to me. with that you get the xl eshlgs, the big oil names, not just the trash. trash did pornl today. look at the big oil names as well. then you add in some of the technology, even the financials had a little bit of a boost. >> everybody gets giddy goldman sachs, we're right at $50. they're basically saying oil is going to be about where it is. >> that's a huge victory for a
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lot of people. most people if i asked them a month ago, three months ago, definitely said there's no way it's holding 50 bucks. if you look at a lot of these ep names -- >> it's not holding at 50 bucks just yet. >> whatever. but i think mel's point is oil's basically within a level that's going to be why are we doing cartwheels. a lot of people never expected it to hold here. $50 at least gives a little more life to a lot of guys. by the way, puts a lot of guys out of business which is good for oil. it gets you to a place where the best balance sheets in the space, do you want to get leverage -- >> this is the worst thing that could have happened. is it right around 50 bucks. because now guys will continue to pump. right around 25 puts guys out of business. >> i don't agree. the hedges in the oil space, four-year highs. a lot of guys are trying to lock in the cash flows to survive. the best thing that could be
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happening, because they can't reinvest in their business. cap x is going lower. u.s. production is down year over year. good for oil. >> part of what kept them in business beside the hedge business is financing. that financing market is not available anymore. >> yeah. what are you doing today. >> >>actually, you talk about energy. i bought haliburton today. >> you did? >> just in the options. i look at the energy right now as a trade. i look at the ovx, and guy are always looking at this the oil volatility index, it's grinding in the low 40s. it was up in the 0880s. 25 to 35 35 to 40, 40 to 45. maybe now we're 45 to 50. >> they're chasing yield as well. >> there's no doubt about it. the big names. >> xlu is up 15%.
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xle up 18 1/2% to date. our yield plays as well it's not a global recovery. >> what were you doing? >> for me, i'm lightening up on all my positions. >> the next guest said it is time to get short the market. former global macro hedge fund manager. great to have you with us. you just put on a short of the s&p 500 in the past week or so. why? >> the last time i came on the show was early in the year. i thought there was going to be a bounce based on the bit of economic strength. i think we saw that. we're now back at the top of the range, big volatile range. the risk reward of a short position is very high. the down side considering what's going on in the economy, means it's a skewed trade. at least try the trade out. top of the range, is it worth
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seeing. >> one of the things that are going to drive the s&p lower, what are the biggest risks in the market right now? >> the risks are -- i mean people know the risk. the business cycle actually causes the nail in the coffin. we've seen how weak the big bounce came off again. the economy's still not great. the global economy is not great. that would tend to suggest earnings in the s&p are not going to be great going for wrdwards forwards. >> here on the desk we sort of have been making a distinction between the financials at this point. >> again, because we don't understand what's on the balance sheets in the financials people didn't understand what was on deutsche bank's balance sheets. we just don't know what they mean. what the bad debts are in the system and how the balance sheet has been dressed up. is it truly cleaned up? >> does the fed weigh in on your
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opinion either way? >> i've personally been of the opinion the fed does very little. they can't because of the global economy. they're making a confusing picture which is why we're getting a volatile trading range. but i don't think they can do much. growth is just not that. inflation is just not there. i think that's complicated. >> you're very clear, i think it's important to say, you were saying, i don't want to short it here. i don't want to be long it here because i'm going to get carved up. effectively where we've been the last 18 months. especially global macro guys. we are in a place we're seasonally over the last couple of years, second and third quarters are the best part of the economic calendar. there's news jpmorgan upgraded second quarter. a lot of people are saying second and third quarters will actually show a lifting of ism. where i'm going with this is do you think there's a chance the fed could be forced into the market sooner than you think? if we start to see some of this wage pressure growth a little bit, the world's a better place,
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you know they at least had that as a caveat out there, and that's really where the volatility comes from? >> if they do do something and the market's not expecting it not pricing it in now for june let's say they do the dollar gets stronger. and oil will be down again. it's a really fine balance. i think if you look at the equity market it's uncertain how to deal with this information, what to do with the dollar, the oil, all these things. >> what are you doing with the dollar and/or oil? >> well i've been suggesting that the dollar goes higher from here. i was expecting a correction. we've never had a correction bigger than 10%. we've gotten down to about 7.5%. i'll remain the same position i've got in the bond market. bond yields i think go down to half a percent over the next 12 months or so. >> half a percent? >> for the ten-year. >> in the next 12 months or so? >> yeah. because if we look at germany,
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japan, sweden, if wee look at denmark, all these developed countries, they're below half a percent. >> is that a depression or recession? >> it's not. what it is is demographics and deflation or disinflation. >> are you long bonds? >> absolutely. >> what's great about your report, which is right here, it's a lot of charts. in the back there's a section called charts. a standard feature of your report. one of the charts is apple. i thought that was interesting. in today's session it was a huge gainer. warren buffett puts his stamp of approval on it in the purchase of the first quarter. you say it's horrible. >> it does. it reminds me a lot of microsoft back in 2000. in fact the market now reminds me of the s&p back in 2000. very volatile range. everybody's long or short, gets killed. apple lost its leadership much like microsoft did about the
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same period of time. microsoft paid that huge dividend, it was so big it moved gdp. apple is in the same place. the market's kind of fallen out of favor with the stock thinking it's not going to do anything good. that's exactly what happened to microsoft. it eventually led the market lower. >> raoul, thank you for coming by. >> thank you. >> he just referred to 2000. the one distinct difference i would go with is valuations. i look at the tech names in 2000. you look at the valuations they were absolutely through the stratosphere. we're not in that kind of environment right now. apple trades at an incredibly low -- microsoft, value play. intel, value play. go across the tech world, everything is value. >> or value trap. >> it can be a trap. i think many are traps, frankly. maybe apple is one of those traps right now. but regardless of that i think it's ha little bit of a different scenario right now. why we're seeing rotation from sector to sector to sector.
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maybe it seems to go through two months, sort of -- then suddenly the next sector. we lose energy we pick up something else. and it's been this rotation time and time again. here we are to tim's point, grinding around. the s&p is virtually call it unchanged over a period of time with some volatility along the sgla why would you short the s&p 500 right now? >> i'm short the russell. i think that's a scarier chart. you're seeing some kind of cross on the 50 or 200. to me the best trade right now, these are somewhat conflicting things, is to be long defenses. possibly long bonds. but long the inflation trade. all these things are working at the same time. what's interesting about what raoul said bonds continue to rally. but i don't know how you get the dollar to rally. if the fed is paralyzed and the world is actually so weak i think the dollar stays weak. >> why can't it be more stronger than the rest of the world?
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that's what i don't get. with your premise, though, if the world stays weak wouldn't the dollar by rocksproxy -- >> we've seen that. i think you're going to be waiting a long time. >> up next one airline is making a big change with a business model and sending ripple effects throughout the entire industry. the name and what it means for the space. the short seller who predicted the decline in valeant is now buying the stock. what changed his mind? berkshire buys into apple. if history is any indication warren buffet's bets haven't always been the best. much more "fast money" right after this. thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish.
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welcome back to "fast money." a news alert. more from headquarters. kate? >> melissa thank you so much. updetails on pershing square capital. having a rough year. they announced recently they've added about 5 million shares of valeant. of note air products. it looks as though they've decreased their air products position by quite a lot. however, a recent filing actually acquired today said
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they bought options equivalent to about 13 million shares of stocks. their economic exposure there is the same. they had previously announced disposition of shares north of 20 million. but that's something we knew as well. what appears new, a large position in nomad foods, a quick recap. we knew that he sold a massive slug of apple of about 46 million shares. a couple of other moves of note. he really unloaded major positions, wholeogic, 28 million shares. he's still in the name. nuance communications as well. i'm sorry, i should say he's no longer in the wholeogic name. >> thank you very much, kate kelly.
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karen, what stands out to you out of all this? >> well the valeant thing, that was in the end of march, i believe, is when he added 5 million shares. that was the 13-d filing. now as a board member he can't trade around this at all. >> right. >> not that he was really doing that. you know you sort of wonder on the sell side do you have to sell things or want to sell things? >> and the notion of replacement stock with an options exposure to preserve capital or to perhaps raise money. >> you preserve capital. where you can keep your same you know exposure if it works. >> right. >> and then if it doesn't, you lose premium. >> icahn, nuance he's been in that a long time. >> i think the perception we all had, and he may have voiced it, but i'm not sure that apple should buy. it made some sense. but apple, because of who they are, and they're not acquiring anybody over $2 billion for the
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most part made sense that they didn't do anything with nuance quite frankly. valeant, you've got to have leverage how can they position themselves to make something out of a trade that's not working. that makes a lot of sense to me. if they had to get out of something, get some of that capital back but still have exposure, maybe at the same level and leverage themselves into that it makes a lot of sense. >> exactly. >> the kor vex, it looks like it filed a 13-f. >> long. icahn's protege. >> right. >> interesting. let's talk about valeant here. we saw it surge. short seller. referred to the stock as quote unquote, the pharmaceutical enron is now reversing course and it is long. that news sent the stock surging. you may recall left was on this
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show. we did see that immediate impact in the shares today. >> yeah. well, that is interesting. although it did say he is long puts. as a trade, remember when he first started with the fillador work, 180, or 170. quickly down to the low 100s. now at 26 maybe all the juice is out of that trade. i mean i don't look at it as you know this korvex news is more interesting. i think citron as a trader i think of corvex as a longer term investor. >> part of the reasoning behind getting long is that andrew luck essentially said or citron essentially said they don't think the new management will do anything, make any calls or make any decisions that will torpedo the stock. they'll be very careful. >> i think they're holding their hands. >> that could be, too.
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>> what's interesting is the street is now with the falling of the tank putting valuations on things. asset sales, delevering the broader strategy it's really a case if you feel like you've got transparency and filings in place and you know what the assets are you can do the math. that is partly what i think people are doing. >> for the last couple of days/weeks, i feel like it's worth a flier to get long. >> really? >> but you have to have a clear stop. and you can't get emotionally attached. you can't say, here's the next line. we all do that when we trade. i think you use a middle to low 20s for your stop. >> if you do that i think the only way you do it is with options. >> premium crazy? >> it used to be. it's still crazy, it's just less crazy than what it was. it was trading over 300% volatility, now it's under 100%. the premiums have been cut into
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a third of what they were. still high but based on the news always circulating about valeant -- >> would you do a spread? >> i would actually do spreads. >> it will be interesting. we should note that andrew left will be in an exclusive tomorrow 12:00 p.m. eastern time. note he's going long valeant. it will be interesting to see where he stands on mallencroft. who knows if that's the right extrapolation. crude hit another year-to-date high. almost back at 50 bucks. why were the airlines rallying? we'll explain. i'm melissa lee. in the meantime here's what else is coming up on fast. >> the stock blowout earnings this week?hen "fast money" returns. you wouldn't haul a load without checking your clearance. so why would you invest without checking brokercheck? check your broker with brokercheck.
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welcome back to "fast money." the move of the day. delta announced it is cutting capacity expectations for the second half of the year. the news sent the entire space higher on the day. i asked phil lebeau whether delta's move will foretell the other airlines? he said absolutely. except maybe the discounters. >> the problem has been these guys have not been able to trade well. you were talking about it earlier. oil's going higher today and the airlines are still moving to the up side which is great. the only name i'm in right now that i've been in for a long period of time is united. and that's something that i'm not even sure whether or not that's going to be able to lift enough to make the options actually come back into play. >> coming up warren buffet's berkshire taking a $1 billion position on apple. will it become one of the oracle's long-term investment? commodities on fire.
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oil, gold and copper all higher. one is about to make a move lower. dennis gartman will tell you how he's playing it when "fast money" returns.
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welcome back to "fast money." stocks surging across the board today. the s&p 500 and nasdaq rallying more than 1% erasing all of last week's losses. the dow closed 175 points higher. energy was the best performing sector. 3% move in crude oil. a slew of big box retailers reported earnings this week. could reports from home depot, target and the like throw a wrench into today's rally. plus "fast money" is going to summer school for trades. later in the show our traders help one college student fix his troubled bet in the ultimate "fast money" trade school. but first, we start off with one of the biggest movers of the day, that would be apple. shares surging more than 3% after warren buffett's announcement a 1 million in the
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tech giant. breaking it down is dominic chu. hi dom. >> melissa, i'm not even oracle of my own schedule next week but when it comes to the oracle of omaha, lots of folks pay attention. let's set the record straight right off the bat. this bet on apple not from warren. one or both of his top picking lieutenants. they made the trade. buffett has made it clear that both portfolio managers have full discretion over their respective parts of the entire berkshire portfolio. they don't need buffett's permission to buy or sell a stock. also remember that buffett himself has famously shied away from making investments in technology companies. the notable exception was that ibm stock that was definitely a personal pick from buffett himself. but even there, he said he's considered it more of a services
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company investment not as much of that technology investment. also remember that his top lieutenants made a big bet, at least maybe not as big as buffett himself, but a bet on intel shares between 2011 and 2012 during that time when they opened it it's estimated they made north of 20% return on their investment. now, the question is whether or not apple and that stake becomes more of a trade to manage around, or more of a core long-term holding. we know that ibm hasn't been performing all that well since buffett's investment and apple stock took a hit after earnings. only time will tell melissa. if you want to know more about the berkshire portfolio, go to we've got more detailed stories. also portfolio breakdowns over there as well. back over to you guys melissa. >> thank you dominic chu. berkshire's bet on apple more of a trade line intel, or long-term investment like ibm? >> i've got to think coming from
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that shop it's a long-term investment. i wouldn't be surprised when the next 13s comes out, clearly they would have had to bought it -- they have more money to spend. i think it is a long-term hold. remember, apple, it's not trading like a technology company, it's trading like a consumer products company. if you're looking for some other category to -- it fits squarely in that as well. >> also as a retailer. >> i also think the bullishness is, the hope is it's a long-term investment. these guys have complete discretion over it. it's anybody's bet. that's why it popped today. he usually is a buy and holder. he's looking for ten-year return on ibm. he's not looking for a quick trade. and if that is a different m.o. that's -- >> in terms of sentiment, we got to a place where the stock was trading with a 12 to 15 rsi indicator. total momentum. and i think a lot of people out
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there have been saying look at some point apple is in a place where i'll own the stock. i actually think despite a lack of innovation, the stock will continue to produce 60 to 70 billion in free cash flow. that is part of why the piling on as of last quarter, it gets to a place you can see there's some very very quality guys that are -- >> it seems like a buffett, even though this is not buffett's decision, it's a buffett decision anyway services. where is the only place apple really showed growth this last quarter? credit suisse was all over this. talking about services. and not only did services grow by double digits but they continue to grow year after year to become a multi-billion dollar business -- >> it hasn't worked out. >> i understand. but that was the thought process of ibm. it was a ten-year decision like you just said. this is probably a ten-year decision for apple.
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>> john sculley last week pointed this out, look it was their second largest revenue group. and services is larger than facebook's. i know it doesn't move the earnings -- move the needle on apple. this is a meaningful part of it. >> this is a trade show not a hold for ten-year type of show. not only does apple rally on the back of this but the chips suppliers, the chips leaders well outperforming the nasdaq. would you face the moves here? >> i probably would. i like what apple is doing. i think they'll sell however many phones next quarter. it still might be short. if it is people start selling those names. >> would you be a seller of those, then do you think the apple spike is a one-day, very short-lived -- >> my opinion, yes. even though i like them. >> i bought the name not long ago after earnings. closer to 97 fought 94. i don't know if this is
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sustainable. i don't think it's a buffett bottom. >> once you get back to par, everyone kind of dives in. >> what do you mean par? >> $100. i apologize. you can roll back down from the 85 level. then it really kills people again. >> all right. still ahead, oil rallying today. you will the not believe where dennis gartman thinks it's headed next. three on deck for earnings this week. home depot, lowe's, walmart. the one name that could shock investors. we're back right after this.
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welcome back to "fast money." commodities surging today. look at oil, gold and copper all moving higher. dennis garltman is the editor of the gartman letter. we want to play a game of higher or lower. and we kick it off with oil over the course of the next month. higher or lower on oil? >> oil's been moving to the upper right for the past several weeks. it moved strongly today. the term structure continues to tighten. the contangos are narrowing. the supplies are reduced because of what's going on in nigeria
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and venezuela. it will be higher a month from now than it is now. >> all right. gold higher or lower, dennis? >> i think it will still be higher. it's been in dollar terms, even started to turn better. it will be higher a month from now. the monetary authorities around the world are continuing to expand supplies of reserves except the united states. >> copper? we had pretty dismal data out of china over the weekend. higher or lower? >> if i had to make a bet, i guess i would bet it would be slightly lower. not dramatically slow. you'll get a bounce but it won't be much. >> it won't be much. you know dennis we had raoul on earlier in the show. he is forecasting the ten-year treasury yield to be half a percent in 12 months. do you see a world in which that could happen? >> i see a world in which it could happen but do i see a world in which it does? probably not. it's been consistently for lower interest rates. do i think we're going to get
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the long bond or ten-year down to a 5% or a 50 basis point yield? i doubt that very much. anybody who's faded the long 30-year move in the bond market has found that to be a very disturbing trade. so probably yields will be lower. but do i think it will go to 50 basis points? not really. >> dennis it's tim -- >> i hate to think of -- hey, tim, i hate to think of a world where we get to 50 basis points on the ten-year. >> you seem to be reasonably constructive on the commodities except copper. i actually really like copper. i hear there's structural declines in the industrial metal space from a couple of these ceos. i'm just curious why copper -- again, grains food stocks, ag rallying crv above six-month highs and above the 200, why is copper not getting any love? >> i would suspect simply because of the stockpiles building up over in china. they asked me to make a
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statement about copper. i'd really not want to be short of copper. i don't think i'd make an implied bet it's going to go lower. i think your point about the other commodities is what's important. grains have turned for the better. gold has turned for the better. most of the commodity markets seem to be turning for the better. the term structures are turning in those directions. but if i had to choose one that i would sell if you make me sell one, i'll sell copper. will i excited about it? no i won't. i would much rather be long the crude oil and gold market and grin grain markets. i like to be long something and short something else i'll choose copper to be short. >> dennis, good to see you. thank you. >> thank you. always a pleasure. thanks for having me on. >> dennis gartman with the gartman letter in a game of higher or lower. steve, are you with dennis on his prediction? >> yes, as a whole i am. he said oil higher but i would bet not that much higher. do you think gold is going
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higher? 4-1 outperformance up and down over gld. up 80% gdx. >> big call on freeport today. >> a couple of things going on with freeport. they've raised some cash. they said they're going to cut $5 billion to $10 billion in the fourth quarter. meanwhile, if you have $2.40 copper prices this is a company that has significant free cash flow. southern copper fcx, these are names that are underowned but certainly the copper chart to me is the most interesting. it's unloved. in fact if anything i'm hearing about structural deficits in copper. >> would you be long glen corp as part of the commodity strategy? >> glen core is one of the ceos out there saying they see structural deficits.
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glen core has had a massive run. to me there's less transparency in that trading business than there is in a business that's got assets the companies that i named. obviously glen core has been a huge barometer for what's going on. >> big moves in commodities to big moves in retailers, home depot kicking off a report tomorrow. what traders are expecting. mike? >> we're expecting some pretty good sized move for retailers that typically don't move that much. after last week's excitement in the space, home depot expecting to move 3.5%. walmart 4%. target a move of about 4.7%. and lowe's we're expecting a move of around 4.1%. collectively if they move those amounts we're looking at a market capitalization swing of over $19 billion. and when you take a look at these four take a look at what the retail sales numbers revealed last week it seems to me probably the best bets are going to be in the home depot and the lowe's of this foursome. >> all right. a lot of people are expecting great things from home depot,
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karen. >> i think this will be really telling for retail in general. we wonder where is the consumer who i believe is still there and still has money and is still spending, we'll see if they're at home depot and lowe's. i think amazon is taking away from target and walmart bigger than we thought. but if they have bad earnings i don't know where the consumers is. >> bad earnings or bad stock performance. i think you're saying bad earnings. >> yes. >> i think the stock performance could be a little under pressure. based upon the fact this has been such a place to hide. the same thing, it may not be a great metaphor when the oil space was in such page people had to put it somewhere. again, there's declining housing stock, aging inventory, people have some free cash maybe from lower energy prices. >> in line guide with home depot? >> when you look at this we talked about the hidden shorts.
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jb hunt transportation. they move and they ship supplies for walmart, home depot, target if these collapse you're going to see the transports collapse as well. >> where are you right now, karen, on -- i mean all the retailers that got killed last week hardly any of them bounced today. >> they really didn't bounce at all. i am long macy's. i have much bigger core positions. very worried about that. clearly they -- you can see them moving together. and macy's really -- i mean they're just sort of struggling. i didn't get the sense coming up in the next quarter -- think about herald square piece of real estate, that is a giant deal. it will take months. >> you know who did bounce today? tjx. >> check out the full show on
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friday. we're going to summer school. for trading, of course. pete helps one lucky college kid fix a failing trade right after this break. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.
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♪ you're not gonna watch it! ♪ ♪ ♪ no, you're not gonna watch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ ♪ yeah, you'll just have to miss it!
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♪ ♪ we can't let you download... ♪ uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. welcome back to "fast money." school may be out, but "fast money" summer school is in session. we're kicking off a brand-new series today. all week the traders are taking questions from students across the nation. moving students to the front of the class. first up is mack incoming sophomore at the university of michigan. for all you "fast money" fans out there, you remember mack. how long you been trading? >> i've been trading stocks now for about nine years. options for now four years. i like the market just because i think that the market shows you
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that hard work pays off. the harder that you work the more success you'll have. i think that can translate to different parts of my life as well. >> absolutely, max. today you brought an spy trade. you're looking for advice on it. professor nigerian is here to help you out. what's your question? >> i'm looking to short the s&p. in the long term we see that the mac dean is falling while the price is rising. as well we see there's a rounding top like we saw in 2000, and also 2007. but short term i'm looking at a retracement of the 61.8% line of the recent rally. in recent years, in late 2014 and 2015, we saw that that after big moves, that there was a move back down to this level. >> sure. >> as well on the short-term chart, we see there's a head and shoulders top.
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right now, the head right here is being placed at around 210. the neckline would be at approximately 204. draw down from that level, if you were to take from this level down to here and draw it down from 204, that would bring it to 198. as well that line matches up with the retracement level as well. so looking at my two trades i have a question for you. >> yeah. >> one option is just buy a plain put spread. i'm looking to buy the 204 put, for $2.68. and sell the 197 for $1.55. the next trade is a possibility is to do a put line. to buy the 204 put, sell the 197 put, two contracts of that and buy the 190 put. for this trade, i can buy for $1. my question to you is which trade is smarter, and the
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expiration is june. >> you're looking at short term. i guess my question back to you would be do you expect a pretty significant pullback? because if you do i'd go with the first trade. if you think it's just going to ease back slowly and just sort of pull back down i think this trade is the better trade. because you're going to be able to get this -- essentially this trade is going to look something like this. your maximum trade is right there. a little bit of a move to the down side. you'll be able to suck in all of this premium you did, and you'll be able to do that. but if you think it's going to be more violent move to the down side, i would go with the put spread. >> my view is especially because there's also the 50% retracement line like 196, i'm not just going to break down to that level as well because it's june expiration. we could also have a a change. if the market pulls back especially maybe after the job report let's say we're in the low 200s, or around 198 or so i
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think that the market is going to kind of be coasting into the fed. you would say that's probably smart? >> this looks like the better trade. you're looking for a casual move. >> all right. great. >> there you go melissa. >> so professor, words of wisdom there. the master of the levels looking at the chart -- >> we just did this chart last week. i totally agree head and shoulders pattern. it's hard to ignore. i think the market does set up for a rolldown. but we've gotten blue in the face in calling for that bearish setup. i do believe that risk reward favors the down side at this point. >> max, great to see you again. >> thank you for having me. >> outstanding job. >> thank you. >> professor najarian great job. >> like rodney dangerfield. >> if any other callers have a question about their trades there's only one school to go to. that's the "fast money" summer school. sent in your tweets. we've got answers for you. coming up on "mad money"
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tonight. cramer has an exclusive with jim murren, and why this casino stock could be part of a winning portfolio. and the component of the index. you won't want to miss that. coming up next, the "final trade."
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30 years ago today, the world was introduced to maverick and goose, "top gun." the international sensation released 30 years ago today. the amazing danger zone song that i played every night. anyone over the age of 30 know the iconic movie by heart. tim seymour actually had a cameo in the film. remember that volleyball scene? maverick and iceman with their shirts off? there's tim, spiking the ball looking hot with that shirt off, taking the question why would you give up a life like that to work on wall street? >> oh man. i tell you what our producers are writing checks their bodies can't cash. >> oh! >> thank you very much. >> time for the "final trade." tim? >> permission to buzz the flight tower. eog resources.
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it's going higher like maverick and apparently not like goose. sorry, buddy. talk to me goose. >> yeah. i like live nation. i think they have good momentum. >> home depot. if you see a spike, you take it. you use that to sell some profits. home depot, sell. >> pete? >> i'll try to chew up a little bit of time. haliburton giddyap, the thing's going higher. >> "mad money" with jim cramer starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there is always a bull market somewhere and i promise to help you final it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends.
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i'm just trying to make you some money. my job not just to entertain but to teach you. tweet me @jim cramer. one year ago today this market hit an all time high. and ever since then it has been stuck in see saw


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