tv Fast Money CNBC June 22, 2016 5:00pm-6:01pm EDT
>> we had bed, bath & beyond reporting. movers there for you too. to carol's point, the so-called brexit vote is tomorrow. and cnbc will be covering the results and market reaction starting at 5:00 a.m. and then all day friday. by the way, probably pretty late on thursday, too. time for "fast money." "fast money" starts right now. live from the nasdaq market site overlooking times square. your traders on the desk are here. on fast, the man who called the demise in valeant. andrew will be here in an exclusive interview. a top bond manager said he knows why global rates remain so low. it's got nothing to do with central banks. later, for all the talk of
amazon's success, one outperforming the giant this year. the retail's surprising story, perhaps the next great trade. but first we start off with the lottest on the ground in london ahead of tomorrow's key vote. wilfred is live there for us now. >> reporter: just past 10:00 p.m. local time. big ben has just struck the tenth ring at the top of the hour. the latest financial times poll puts leave just ahead. the resulting poll of polls is 44 go to 43 stay. that has a small effect on the betting market. which we know still favors remain. we've tightened the odds such that 80% remain down to 74% as we stand this evening. what's ahead in the next 24 hours here in the london and the rest of the united kingdom. of course, the polls open at 7:00 a.m. local time tomorrow morning. 2:00 a.m. eastern time.
they close at 5:00 p.m. eastern time. we'll start to get the first regions reporting results, estimates of these times at around 7:30 p.m. eastern. and then all of the results should be through with an outright announcement of the outcome by about 3:00 a.m. eastern time on friday. 8:00 a.m. local time here in london on friday. that also happens to be when the stock exchange in london opens, and europeans will be able to respond to the results whichever way it goes. >> all right. wilfred, thanks so much, wilfred frost there on the ground in london. that brings us to the markets here, which are very much on edge despite the closing numbers. traders scrambling to buy protection on their portfolios. the vix surging, above 21, despite a market that barely budged. got to go to mr. options, dan?
>> listen, the next couple weeks you're seeing vix move. once we get by brexit, take the polls however you want. people are just covering their butts for all intents and purposes. we get to the nonfarm payroll numbers in the first week of july, and then quickly u.s. corporate earnings become the main event here. to me, i think people are looking for near term protection. i don't think it says a whole heck of a lot. i think one trade that happens in risk asset is the vol will come out of risk assets. that's just going to be sell calls against what you have. do whatever. you're not going to have this event. it's just not going to happen. >> grasso? >> i think that's right. everything that didn't run as much as the risk assets will probably be rebought once this event transpires. utilities, gold, staples, yield. simply yield will be repurchased. >> all right. earlier this week we started off our market session is this a sell news event no matter what
happens. we're seeing a market that climbed since last thursday which is when jo cox was brutally murdered. and ever since then, we've sort of held on to the -- we've climbed and held on it oh the gains for the large part. >> right. if they vote to remain, i would think it's largely a nonevent. here's what concerns me, everybody that i've talked to in the markets expects a remain vote. we saw the most recent poll. there are 13% of the people that are undecided. the assumption in the market is that's going to skew towards remain. that fear will outweigh anything. i don't know if i want to make that assumption. i was surprised that the vix increased today. i would think people already had their hedges on. i don't think it's a horrible idea to buy some hedges. it's going to cost you a lot, yes. but i tell you what, if they vote to leave, this thing will come uncorked. >> forced to choose, buy some hedges or get small. reverse position? >> well, i think it's the latter to be honest with you.
the vix is at a level where we've seen it sell off time and time again over the last couple of years. if they vote to leave, where it would have been larger a couple weeks ago will be muted now. a lot of people are probably hoping for it. now, i'm not going to pretend what's going to happen. i will say this, once we get through all this, i think to dan's point, then you look at the environment, say to yourself, we're still in a low growth environment. we still have tremendous headwinds. there's still issues for the broader market. why is the s&p trading roughly 18, 18 1/2 times forward earnings. >> that's the point is that nothing has really changed. the only thing that's really changed is yellen sucked whatever growth we ever had, or prospective growth we had in our minds out of the room. she made it sound so much worse than it is right now. i'm actually 75% cash. so i'm still out of my disney, still out of my apple and dupont. >> hold that thought. we've got to go back to wilfred in london.
the latest poll out of britain. wilfred? >> reporter: the very latest polls, plural, we've had two in the last couple of minutes. saying 48 to remain against 42 for leave. that one just on the 15th of june was 46-45. plus six for remain. a significant shift to remain. a poll for the "times" coming out at 51 stay to 49 leave. i don't yet have the previous result. but both of these putting remain ahead, offsetting slightly the couple of polls we've seen earlier today. either way, all of these still remain incredibly close, in what is, as i described it before, the biggest vote in a generation in the uk. and not just little old england looking at this, the whole world, financial markets certainly. >> will fred, thank you for the very latest there. basically a margin of error on the polls in terms of the swing. >> let me tell you what i'm
watching. i'm watching the tlt, the 20-year u.s. treasury etf. think back to august, when we really saw risk asset volatility go berserk, we had the spike to multi-year highs in the tlt. that came off really hard, once things kind of calmed down. the same thing happened in february. you know what we had last week, on thursday, the morning that the -- we had the same spike, and a sell-off. the tlt is now 4% from those all-time highs here. i expect you see it come in. i think the tlt would be well bid if people were believing those polls. i think it's a low probability event that you get a leave vote. >> what's going on with gld at this point? you would think yellen on top of the brexit would put a bid on gold. >> there are people that have been burning up in gold. you can see people taking money off the table ahead of this, no question. i still think gold remains a market you want to play without question. i would say tlt, i get it. a lot of people think it's a safety trade, whatever word you
want to use. look at the bond auction today. you had a big reversal today in tlt, to the upside. yields did go down. i would contend still what you're seeing globally is not a function of brexit or anything else, a function of a planet slowing down and inflationary pressures. >> tlt could get a bid. i would watch over the next couple days the european periphery markets. spain and portugal. even if you get a very close vote, which it looks like it's going to be, we could just be looking at the beginning of spain saying, you know what, maybe we want to have a vote like this. portugal, maybe we want to have a vote like this. you could see the spreads widen out. that would mean risk off for the rest of the markets. >> we've seen the move pretty sharply lower, when there was a brexit fear. what happens to the deutsche banks of the world? >> they've had a rally over the last week as well. i would look to reshort some of those. i have a core position short on
that, but i would look to reshort bigger positions in deutsche bank, and suisse bank. >> peter is here with us on set. peter, great to have you with us. >> thank you, melissa. >> to brian's point, what happens if the vote is in fact close? does that bullish thesis on europe, is that challenged? >> i think if there will be a brexit, and periphery as you said, brian, is selling off, i would aggressively sell the periphery. i don't think the market -- the market assumes there will be a domino effect. england is out, spain, italy, et cetera, et cetera. if you really look at the economics, all of these countries cannot afford to leave the euro, tied with the currency. hold the referendum in italy, for italy to say we're leaving the eurozone, it's basically shooting itself in the head. >> let me push back in that. let's say we have a brexit. the pound goes down. that's going to be good for the
uk economy. why wouldn't somebody in italy, a politician that perhaps, maybe we disagree with the macro economics, but in this day and age with extreme politics out there, it wouldn't surprise me at all to have somebody say, let's leave and go back to the lira, and the peso. >> i think we're in the midst of bigger reforms in italy. i think it will be a big wakeup call to the rest of europe. germany will realize this austerity policies, they don't work. >> they haven't realized yet. >> well, they are in the process of realizing it. you hear it from the finance minister, everybody. plus what you have, the ecb will come in and provide massive liquidity. you get basically fiscal stimulus, plus monetary stimulus and weak euro. and the european economies are covering in the first place. so we think, you know, you want to pick that up on any weakness. domestic plays, building materials, housing. >> let's say there is a remain vote in britain and everything
is status quo. what is the catalyst for growth in europe at this point? >> the catalyst is still the same. the catalyst is that we've had seven years of recession and decline. and everything is superficially depressed. so we have housing starts at 20-year lows. automotive sales at 20-year lows. it's just the coiled spring that- >> what uncoils it? >> the ecb and other governments. >> we're talking about european banks, in a death spiral until last week. about a 10% bounce here. it doesn't seem just brexit or remain. could that send a monkey wrench into your -- >> i think that's the one sector where you have to make a big difference. i would say buy europe, you know, whether it's remain or brexit. because of the economic improvements. the banks is a little bit different. because i think the banks have big issues with interest margins. it's a brexit, you know, the ecb
will flood the market with more liquidity. the banks will have a problem. i would stay awa way from them. >> your top pick in europe? >> basically housing, building materials, some steady cash generators like cable, internet operators. but all domestic plays. because we're really focused on domestic euro. there's pretty unique countries, too, countries that pull their weight. switzerland, not part of the eu, but sweden, netherlands. >> peter, thank you for coming by. >> thank you. >> where would you stand on europe? >> i think peter makes a really good point in that you have to stay with the domestic names there. in other words, companies that are selling within europe. because the external, we're talking about the global slowdown, a global slowdown, that's not going to be good for the exporters in europe. in particular, i guess i would just be short the euro, long the u.s. dollar.
to me, i think that's just the no-brainer trade here. >> i don't have the confidence in the ecb peter has. ewg is the germany etf. who did we have on, a couple weeks ago, we had flash gordon talking about preemptive strike to buy the ewg. i'll say this, i would rather buy above 28. here it is 25 1/2 or so. lucerne is beautiful. ever been? >> no. >> the lake, it's beautiful. >> i hear it's wonderful. >> i do agree, i think you want to buy europe. european banks. just off of this. just for a trade. what gets me nervous is when we talk about risk right out of the blocks, out of the start of the show, yellen started talking about china. china was her first concern. if you look at all of those risk-on assets, if those come for sale, they take the s&p down with them. >> i'm with you guys, the european banks, i think it sets up the 10% rally since last
week, sets up as a great sale. i think you're going to see more of it in the region no matter what happens. >> if there's more negative rates, the banks are going to get crushed. >> up next, one big box player is a big winner for 2016. a major effect on none other than amazon. plus, the man who called the demise in valeant is making a full-on bet against elon musk, and it's not just shares of tesla. a bond investor said he has a simple explanation for low global interest rates, and it's got nothing to do with the feds. but it could have big implications for your money. you both have a perfect driving record. >>perfect. no tickets. no accidents... >>that is until one of you clips a food truck, ruining your perfect record. >>yup... now, you would think your insurance company would cut you some slack, right? >>no. your insurance rates go through the roof.
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sglnchs a very unlikely battle in the retail space. that kicks off the top trade today. look at the performance between walmart and amazon year-to-date. walmart the big winner with gains of more than 17% since the start of 2016 versus amazon's mere 5%. >> walmart over the last couple years has actually been fighting competition on multiple thoughts.
walmart had a rally because they started to go after the dollar stores. i think a similar thing is hang here with amazon. al mart announced, now we're going to be doing more ecommerce. i would be careful. because when you see amazon crack, you're probably going to see the whole retail sector crack. the reason i say that is, what we've seen is tremendous online sales. we're going to talk about fedex later. those returns, those earnings were down today. and i would say that the excuse people are using is everything's going online, amazon is the winner. when that excuse isn't there anymore, you have nothing left. >> we've seen the whole retail space crack already. when you see amazon crack, the others will probably rally. as for walmart, interesting stat that i didn't know. 56% of revenues is groceries. i didn't know that. all they have right there is pricing. it's in the single digits for amazon. amazon is still a retailer. in april, amazon exploded, up 22%. walmart didn't do that. it actually traded down about
8%. so i think there's a lot of stuff you have to kind of weed out here. i would still rather be a buyer of amazon ultimately. but right now, seems to be running out of gas. i've said this in the past. that once it broke below 700, it rallied back. still negative. >> you're talking about walmart up 17%. what's down about 17% from the 2016 highs is target. to me, actually, this thing has been set up as a decent pair with walmart on the flip side. if you think that -- i think target could fill in that gap toward the mid-70s. >> seeing that, we're sitting on the other side of the desk. >> do you agree? >> i'm just typing in letters. >> typing in letters randomly? >> i remember we had these massive double tops at 85. the huge sell-off down to 67 or so. i would suggest that if target can recapture 70, which it's close to now, i think it could
move 10% to 12% to the upside. "options action" every friday at 5:30, by the way. >> the biggest tech ipo so far this year. will they win over wall street. and what might it mean for the market. you're watching "fast money" on cnbc. first in business worldwide. here's what else is coming up on fast. >> we're 900 years old. >> probably true. but the head of a major bond fund says an aging global population could be the most important factor in driving your portfol portfolio. plus, here's what short seller andrew said what happened to shares of tesla. now he said elon musk just admitted what lef is a dirty little secret.
welcome back to "fast money." the nhl making a big bet on las vegas. that has hotel operators real excit excited. jane? >> reporter: hi, melissa. las vegas has its first professional sports team, the nhl today approving an expansion team that will have its first face-off in the fall of 2017. a victory for the city and bill foley, who will even the team. foley is paying a $500 million franchise fee. home ice will be the new $375 million t-mobile arena which opened this spring. mgm ceo calls today's decision, quote, great news for our
community and our economy. and with over 17,000 seats in the arena, foley has already taken season ticket deposits for over 14,000 of those seats. it's taken forever for people to accept the idea of setting up shop in the capital of gambling. there's a big push to build a football stadium. what will the new hockey teaming called? hmm, don't know. foley's new company is called black knights sports and entertainment. a hat tip to a cadet at west point. we'll have to see. >> what's your vote, jane? >> reporter: oh, i would say the las vegas lizards. >> not lizards. no lizards in las vegas. i mean, sure -- >> reporter: that's all they have out there. they don't have any ice. >> touche. >> jane gets me.
las vegas boxmen. the las vegas -- because when you're at a table, the box man stands behind and watches everything. las vegas box men. >> that's a lousy idea. >> reporter: i get you, i don't get that. >> las vegas box men play the rangers here -- >> box men? >> reporter: go box men, go. >> thank you, jane. jane wells. >> reporter: you're welcome. >> no more box men talk. dan, what do you think? >> the ones in vegas have obviously, they show great relative strength. to me, i don't know how you can play win up here at 100. mgm seems like the one beneficiary. las vegas sands has been in a massive downtrend. it just seems like there's one more shoe to drop for the guys in vegas. it seems like mccow is still out
of the woods. all in all, there's probably a real estate play in vegas. if they're going to start getting all these sports teams, you're going to see this turn into a much bigger area. we know the sands were kind of -- >> like home builder? >> home builders that are exposed to that area. >> up 45% year-to-date. it has an overabundance in mccow. if you play mgm, if you think the negative news out of china is going to restart up, i think you play mgm. >> listen, i would be selling mgm on this news. i don't think it's a big mover for mgm. but the run mgm had in this, i would be taking profits. wynn, i would be a buyer on a pullback because i like steve. >> i'm moving on -- i'm going to break. >> box men, i'm just saying. >> up next, short sellers
targeting musk. not tesla shares. taking aim at solar city. explaining why the stock is going to zero. that's next. later, the head of one major bond fund said the aging population could be the one thing impacting your money the most. he'll explain why when "fast money" returns. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t. ...of fixodent plus adhesives. they help your denture hold strong more like natural teeth. and you can eat even tough food. fixodent. strong more like natural teeth.
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as long as you love me, it's alright bend me shape me, any way you want me... shape the best sleep of your life. sleep number beds with sleepiq technology adjust any way you want it. the bed that moves you. only at a sleep number store. welcome back to "fast money." stocks ending in the red for the first time this week, as every major average closed at the lows of the session. the s&p in a holding pattern, 20th consecutive session of less than 1% move. here's what's coming up in the second half of fast money. the head of one major bond fund said there's a simple explanation for low yields and it's got nothing to do with the fed. how much do americans really know about the brexit? our very own guy adami hits the streets in new york in a very special report. tesla's bid to take over solar
city, with the latest. quite a reaction in the shares today, phil. >> melissa, it's brought out both the tesla haters and those who love anything that happens with elon musk and with tesla. so far, those doubting this deal, as far as the investors are going, those are the ones who have ruled the day. look at this deal, in the way elon musk, when he announced yesterday, it basically says, look, you may think of us as an auto company, but we want to be a sustainable energy company going from generation to storage to energy. and solar city is the part of this that so money people are having trouble trying to understand how it plays into tesla in the future, in part because on the financial side, it lost $261 million in the first quarter. and even though it's cash flow negative, elon musk said, three to six months from now, it could be cash flow positive. he's bullish on the pros pects
for the company. >> i think solar city is the best company out there. and it's got -- sort of a leader in the field. it has the technology. the product direction i believe is correct. it's not a company out there like that at all. >> i know there are a lot of people who are saying, sure, he's the chairman, he's their biggest shareholder. of course he loves the company. barclays out with the numbers here today. look at the cash flow estimates for this year. negative $1.8 billion for solar city, and at the end frt day, the numbers will win out with the investors. so far, what they're saying when they take a look at this deal, at least by their trading on the stock today, is, i don't get it. i'm not sure i'll ever get it. >> yeah.
phil, thank you. phil lebeau in chicago. andrew is the executive editor of citron research. andrew, welcome to the show again. >> hi. nice to join you. >> what is your position currently on solar city? >> i'm currently short solar city. i've also been short tesla. i think what happened today, jim said it best, the complete aberration of corporate governance, probably the worst that wall street has to show of itself. the cell side analyst and corporate governance. i think what should happen for the benefit of the tesla shareholders is this deal should not go through. if musk is not voting on it, i would vote against it. i believe solar city would then go to zero, just like -- as a
matter of fact, i was on your website today looking for who actually likes this. the only clip i saw, you had an analyst from avondale who said, he actually thought solar city was a good company. he was with them all the way down. he supported it. obviously the balance sheet of solar companies, his best asking. that being said, not against him personally. more against the fact that there's not another side to this argument. when i heard that sound bite from elon musk, it doesn't sound like the typical musk swagger that we've heard in the past. he actually sounded like it was almost reich a ransom note, like he was being tied up. >> to be fair, not to be fair, but he did have a certain amount of swagger when he called the deal a no brainer. i'm curious about your positioning here, andrew. one would think this is a trade short tesla. why would you be short solar city at the same time? i would think tesla would have
better access to the capital market and its position would be better. >> if the deal is called off, i believe tesla could stay where it is now, go lower, or bounce higher short term. but if it's called off, i think you have the 100% downside in solar city. that's why. meanwhile, if the deal goes through and you're short solar city, you're short tesla. >> were you short solar city going into the announcement of the deal? what i'm trying to get at is -- >> yes, i was. >> so you thought it would go to zero even before this offer from tesla? >> i thought it was going to go much lower. now i see this offer from tesla came in. in my opinion, it completely seemed like a lifeline. there was debt lines that they were in their 10k, being in compliance. a big debt payment due next year, '17. i think this actually shows how
imminent the problem was at solar city. now, actually, it reinforces my thoughts on it, yes. >> andrew, when you came in today and saw the stock was up 10%, 15%, whatever it was, you know it's got a 40% short interest. elon musk goes 22.5% of the flow. the fact that it spent the whole day went to the upper left to the bottom right, it was the most damning thing. it appears investors, not just you, don't think it's going to happen. is this the sort of thing -- >> you know what? for musk to say the word no-brainer is an actual insult to investors. in anything else, this actually makes people who are his supporters question his judgment. yes, it is a brainer. that being said, i saw sentiment changed today amongst the pundits and people who discussed tesla, as you called it teslanarians. >> in terms of your tesla view,
i know -- it was a few months ago when it was trading 180 or so, here it is back to probably when you started talking about it. where does tesla go? in your world, as you view elon musk and his companies, tesla specifically, where can the stock trade down to? >> this is going to sound crazy. if you ask bob lutz, an auto executive, he will tell you it goes to zero. if you ask someone who just looks at business, go to a business school, they'll tell you it's a zero. how long will the capital market allow a company to sell a product at a loss? that's the real question here. is this a car company? then there's no value on it right now. i would rather see musk face that. at least you could say space x is disruptive doing something new. solar city is not even technology. it's a subprime lender of solar
space. if they incorporate this in the tesla model, i think this going a lot lower a lot faster. >> musk didn't have to, but he did, andrew, on the conference call today he said there would be no material impact to tesla's cash needs or expectations for cash. and cash flow positive by year end. what if, let's just say he actually delivers on execution when it comes to the cars, and delivers on the -- >> this is not -- understand, he's elon musk. he's an individual. he might be a visionary, but unless he can personally find a way to clone 2 million of himself and install the solar panels himself, it's still a company. at one point we'll look at this musk -- in one year, two years, three years, investors are going to kick themselves for not taking profits when they had them. >> how long do you press these shorts? >> tesla is a long-term short. i'm short tesla the way other
people would be long whatever stock that is -- that they're long on a legacy basis. as for solar city, i was short also. now i have to be a lot more careful and look at it a lot closer. just make sure the borrow feeds don't get in the way of profits. >> is solar city the next item in the space? >> the balance sheet tells you right there. those are numbers. the numbers tell you -- >> is that a yes? >> oh, yes. yes. look at how this stock was valued and positioned before today. i've never seen a stock with a 50% negative rebate at such a high shortage taken out ever in the history. because traders and investors knew what this was worth. the shareholders who owned it were the musk fans. simple as that. >> all right. andrew, thanks so much for phoning in. appreciate it. >> have a great day. >> andrew left of citron
research. i think the short interest is a good point. if it is a 40% short interest in the stock, a 3.6% squeeze is really not saying much. >> you would see it overshoot the range. the stock for stock deal, therefore, the stock down 10%. tesla, that is, putting pressure on it. that was all you needed to know. a guy like andrew was already short. probably laid into it in the close, too. >> for the folks at home, if you're thinking about shorting solar city on this, what andrew said is very important. check the borrow rate. it could get very expensive to be short. so you might make money on your short, but you'll lose it on what you're paying for the borrow. >> the technicals on tesla is 190 is the next level. we talked about this last night, it goes down to 170. a retracement. i've been negative on the stock because i don't think they need production numbers. so that's my trouble. >> another thing. >> it hurts them worse.
>> you've got to respect andrew left. 170s, 180s -- >> but to say it's the next sun edison? >> he puts his money where his mouth is. he's also a guy who said gap was irrelevant trading 26 1/2. look where it's trading now. i dig him. he puts it out there. he does his work. and more times than not he's right. >> all right. solar city shares down about 2% in the after-hours session. andrew left, not alone in the solar city skepticism. one trader spending $1 million that it's for a dive. >> obviously option volume kind of exploded in solar city on this news. ten times average volume. the largest trade of the day was out in october expiration. there was a buyer of 2,000 the october 22 strike puts, paying $4.80 to open. that's about 22% of the underlying stock price.
that was when the stock was about 22 bucks. it breaks even down at $17.20 on october expiration. this is not exactly how, if you're pressing a short, you want to do it. that short rebate is ooh really tough thing to play. i mean, listen, this is a big boys game here. you shouldn't be looking to speculate for a zero buying a nearly $5 option in a $22 stock. but i just want to bring you over to the chart here. this is since its ipo. it was late 2012 at $8. it had this move. there was obviously this high short interest. the musk thing was a big part of it. but the company has been losing money hand over fist. when you think about what's going on here, if this deal doesn't happen, the stock's going much, much lower here. but i don't think you would be long premium and way out of the money puts. >> for more "options action," check out the full show at 5:30 eastern time on friday. can old age be driving interest rates lower? a bond fund manager tells how it
could be america's new reality. what does the brexit vote mean for the people here in the u.s.? guy adami has a report later on this hour. 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.
we've had an economy that's, you know, for the last four quarters, growing about 2%. growth was quite slow in the first quarter. at the end of last year. looks to be picking up. we're watching things. i don't want to send a message of pessimism about the economy and where we're going. >> fed chair janet yellen testifying today before the house financial services committee. interest rates aren't expected to go up anytime soon. this could hurt a number of americans. greg parsons with semper capital. greg, nice to have you wh us. >> great to be back. >> we've been talking about the actions of central banks. there's also a demographic change here in the united states. are people forced to go into treasuries in any way? because they have to save? they have to do this in a conservative fashion? >> the population is aging. you see the individual level, in
public funds, corporate pensions, folks that have to match the liabilities. frankly, what's effectively a zero low interest rate environment, folks are potentially more nervous about the forwardooking rate of returns and equities in other parts of the capital markets. if you save $1 million and plan on earning 5% off that money, now your expectation is earning only 2% off that money, you're forced to save. >> that would imply even if the fed raises interest rates, the impact on treasuries would be di mini muss, because there's another force at work because people need to be in treasuries. >> i think the fed is stuck between a rock and a hard place. one eye on the continued stabilization of the improvement of the u.s. mixed with the interconnectivity of the world global markets. so while -- as folks manage their own risk/reward ratios, and find attractive assets, security and safety, they're
forced to the most liquid and safe of assets. >> lesswhat are some of the spo that you've been going in and out of. are those opportunities largely over as we do approach the brexit vote? >> we specialize in structure credit. the ongoing opportunity in mortgage credit. as evidenced in the first quarter. globe risk off. adds volatility, unrtainty. this is an asset class fundamentally tied to the u.s. story. fundamental improvement of the assets backing our collateral. and so as the risk off trade trickles down to our market, we see opportunities to continue to add high-quality paper that's fairly insulated from a credit perspective, from some of the volatility and turmoil going on elsewhere. >> i want to go back to the low global yield to the demographics. it strikes me that that could actually work in reverse. so as the baby boomers start to
retire, they are either stop saving and the percentage of people at the saving age starts to decline, they will have to withdraw money from funds, whether it be stocks with high yield or bond funds or that. and that could cause rates to rise, stocks to go down, for no reason but for the same kind of noneconomic reasons that they're so low right now. wouldn't that be kind of the bearish case for that? >> that would be a bearish case. public funds today, the majority of them massively underfunded. as they reset the assumption on where they can find return, safety and liquidity become paramound to say there's something there to fund their liabilities. >> thanks so much for coming by. >> thank you. >> i will continue to -- listen. greg knows this stuff in that space. his world is a little different than mine. i would submit this, i still think 10 1/2, $11 trillion of negatively yielding sovereign bonds have to have detrimental
effect at some point. inherently it's a bad thing. i do think rates continue to go down. at some point i think the stock market catches up to it. >> greg is a savvy investor, but most of what he does is not for the person sitting at home. they don't know how to access his markets. when people start talking about utilities or staples or yield stocks and say they're overvalued, you have to look at multiple expansion. it sounds like the story is not changing going forward. people still need income. if there's only one place to get them, they'll go to that source. >> they need to know what they're getting in utilities, where yields look good. you are buying into a massive bubble. you're bing into -- you can still make money off of it. this is probably one of the largest bubbles that we're going to see -- >> and what happens, though, when it pops, though? they'll still be yielding stocks, right? unless there's armageddon -- >> all i'm saying is that -- >> the markets pop, yield stocks pop, they all pop. >> agreed.
>> ultimately -- >> this is the black swan, that's my point. the bond market and low yields is the black swan for this market. >> janet yellen just said treasuries were fairly valued today. >> here's the thing -- >> i'm just throwing that out there. >> janet yellen was on the team that thought the subprime was contained. >> and biotech stocks were overvalued. and they're much, much lower. >> i want to make one point, though. verizon, a great example. this stock has rallied 10% since the treasury yields started going down a month ago. a company in late april that actually their q-1 results displayed a lot of pricing pressure there. there's bad fundamental stuff there. i'm in your camp there, i think there's a bubble. the brexit vote looming over europe. you're watching "fast money" on cnbc, the first in business worldwide.
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know what brexit is. what does brexit mean to you? >> brexit? i don't know. it sounds like breakfast. >> it's a car. >> when you jail break your iphone? >> what is brexit? >> brexit is whether britain is going to leave the european union. >> what is going to happen, are they going to stay or go? >> they should definitely stay. >> leave. >> stay in the european union. >> i think britain should do whatever they wrant to do. >> what does it mean for your money? >> i really don't know. >> absolutely nothing, other than we have long positions we like to cover. >> crashes? >> crashes. >> a bit of a nasty situation. >> stocks go up, stocks go down. that's part of the game. it will go down for a little while but event actually it will come up. >> you've just got to keep plugging away. >> imagine if it were a pretzel.
>> cheese sauce or something on it. >> look at the british pound hitting a 2016 high. this after the latest polls, which indicate a stay is gaining some momentum here. we're seeing the pound make a sizeable move here in what we call our after-hours session. >> listen, i'm going to go back to a couple of years, it was anarchy. some people wanted that. news organizations wanted it, traders wanted it. i think that's a lot of the buildup right here with brexit. >> this is a magnitude, it -- if britain leaves there's going to be some turmoil out there. particularly the way the market is trading right now. >> you can't keep sneaking off like that. speedy gonzalez. up next, "final trade." you may think you can put off checking out your medicare options until you're sixty-five,
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>> derek rose, did you hear him? >> oh, yeah. i talked to him in the green room. >> ice, intercontinental exchange. they trade all the things that are going to move. >> i'm melissa lee. thank for watching.. 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 find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica and welcome back to our home on the west coast. cnbc's one market. other people want to make friends. i'm trying to make you some money. my job, not just to entertain but to teach you. tweet