tv Fast Money CNBC January 29, 2021 5:00pm-5:30pm EST
maybe they were discounted by the run-up in the stock before we got to those numbers but really what's going on right now is this reposition oing shock. it's kind of vibrating around the market which is the explanation >> deep expletive later. >> they're retail traders. they're not a mom. i did not mean to be derogatory. >> of course, never. we say to everyone, have a lovely weekend "fast money" starts now. hi i'm brian sullivan in for melissa lee. this is "fast money. steve, barb and it's a big show. tonight on fast, j and j delivering will this be the game changer that markets, humanity has been
looking for. could it blow from robin hood derailed a crypto rally. and did reddit rebellion on wall street money we've got you covered an hour, 6:00 p.m. eastern. deep impact it is having on the business of short selling as well as the overall markets. welcome, everybody it has been a wild week on the street of dreams we're going to dive deep into the specifics of this crazy week of stocks. let us start macro and the big selloff. the s&p 500 sum bling just under 2% today the dow, down more than 2% first time they've lost 2% on a friday since all the way back in early june of last year. overall this was the worst week for the markets since october. many of the biggest of the big getting a little bit smaller
today. investors selling what's salable, maybe to raise crash. apple down more that 5% this week test ha, microsoft, facebook and others getting sold off. perhaps the reason smaller traders bidding up from the stock's big hedge funds are betting will fall. this is largely being sold as the little guy taking down big bad hedge fund steve grasso, there is of course some of that like most stories, it is not quite that simple, because it appears what began as this reddit rebellion against a few highly shorted stocks might be affecting other parts of the macro market and mom and pop stock wondering what's going on. >> that's a great way of looking at it. you talk about high short interest and the rest of the market has fallen out of bed
think about how many people own stocks think about the pension funds. think an the teachers pension funds. think about police officers. think about firemen. think about the average joes out there who i consider myself an average. >> i just oe that are making money in an institution, not a wall street institution. they own stocks, too so i have to figure that their pension funds and the way that they are in the market, whether it's a mutual fund or a pension fund, is not top-heavy in game stop, is not top-heavy in amc, so this is the average person in america that is probably getting -- taking the majority of the brunt of this hit, when we see a handful of names create margin calls or --
>> yeah. >> think about this, brian if you're a short seller, right, so a hedge fund has shorts, they have longs and they are hoeedged. then if you take down your short you have to sell your long you're selling your long, it could be apple, facebook, microsoft. it could be any one of those bracket names because that's -- go ahead, brian. >> no, no. again i'll go back to you steve before going to barbara. that's how this is playing out new the broader mark this is why it matters it began as sort of a curious little corner of the market, but we're looking at game stop, amc and even blockbuster and blackberry and nokia shand these stocks sort of explain it, steve, since you are an average joe in an average joe way, which is if you're whacking the hedge dpunds -- which by the way nobody's feeling sorry for
because they stupidly climbed on the same stock but now to raise money, they may be forced to sell what they can and also, steve, i want you to comment on this and we've got to be very careful of how we frame this robin hood started limiting orders on a couple of stocks as we just heard, they're limiting purchases to one share, one share. i mean, what a joke, on amd, starbucks and others it is not just these heavily shorted names. this is starting to bubble up as a bigger market story and one wonders where it goes. >> yeah. i'm not a fan of regulation when it comes to restricting any of this stuff i don't think they did anything wrong. they used the markets and the markets are a speculation process, right if i buy a stock, i think it's
going up it doesn't matter my reason why i think it's going up. i'm speculative. so i don't think there's a real fix that we can look at, brian, but to regulate whether you're getting in a getting out of these, that's pandora's box, and you better hope we don't open that up right now. so i'm not a fan of the regulation, but i do see you bring up a great point that the average person is getting hit by their holdings when apple goes from 144 to 130, every pension fund, every mutual fund owns apple. forget about the hedge funds all of those own it and the average joe gets hurt. >> ok. but barbara -- ok. i agree with obviously what steve was talking about but i want to continue this in the broader market story again, need to be very careful here, because last night we had the ceo coming on cnbc and
others saying we're fine then they go out and raise a couple million bucks and say they don't need it just sort of a safety net. now you've got them limiting order flow on more than 50 stocks let's be clear if this was e trade or schwab or td or others saying you can only buy one share, but don't worry, we're open how do you think, barbara ann, the market would react >> so i agree with steve i don't think regulation is right or the answer. they clearly dipped into capital or they wouldn't have raised over a billion overnight this is really a david and golden knight story. they're risking upsetting david. that is never a good strategy. in this scenario, i think the hedge funds are the dumb money right. every experienced hedge fund manager knows you do not short a stock with 138% short interest
and you also look at what is the cost of borrowing those shares in the case of game stop it was annualized on 120% the max you can make is 1100%. in terms of risk and reward, which is what investing is, the retail guy nailed this the hedge funds overstate their welcome in these shorts. i've been getting e-mails telling me my long-short fund is dead, shorting is dead i don't think that's true. >> yeah. >> if you are a smaller manager you can take advantage of extraordinary short opportunities. you find that all the time in debt, denial and disruption. and those are extraordinary opportunities. our shorts are up for the year, but is shorting over for these billion funds that are crowding
into these names well, yeah, maybe. in terms of risk/reward, if you have to short heavily shorted names, wouldn't be going vol be better >> i talked to a trader earlier about this here's the irony he said he thought that bizarrely, there might be more shorts now going in on game stop, that you're not running the shorts off you're running the current shorts off but if you hate the stock and you think it's going to drop and the price keeps going up, at some point, you might have more shorts coming in at the top. a, do you believe that could happen or game stop will finally be left alone, and do you think that this battle will continue or even exacerbate next week. >> ok, brian how much time do you have? pull up a seat >> i've got two hours. we're going to 7:00 live,
brother. >> i hear you, my man. let me try to take this down in bite sized pieces. this is a large meal to try to digest here. i see a risk on-risk off posture. what i'm saying is you're seeing equities pull back, which suggests risk off, which we've seen in high ball jet streams, but we're seeing performance in the most speculative aspects of the market when will you adjust for things like sharp ratios and probability, you're taking on more risk even though the overall market looks like it's pulling back when will i see names like apple, facebook, tsm, amd moving, you know, the percentage moves in those are two-thirds. royal caribbean and cruise for me it's an opportunity we've both -- you've all spoke
about pigeon funds and whole fundings you're now getting into solid companies that have blown out earnings added discount and you're dampening volatility in your portfolio because the reason they're willing to sell those names is because they don't expect them to have as volatile move. so it's a self-fulfilling prophecy now on to our second course, what i would say is yeah it would not surprise me if there are also institutions retrenching with their shorts, but -- and this is where the regulation comes in. that is part of the listed market by design you've got to disclose what you have it's on the tape everyone can see it. but for that, you goat anonymity. so i'm with the crew here. it's not for us to step in and say who can and who can't. and it's -- >> yeah. >> -- per pos trust to save people from them save them when they're hurt, not
when they're making money. >> the deep bleeping value is the on reddit. i can't say the name because it's an expletive. you're all supposed to be yale educated traders who are smarter than us but guess what they stupidly piled into this name you mississippied sharp ratio. you got to throw a sitoshi in the jar. where are all these acronyms naked short selling is supposed to be banned and this is not purely that. steve grasso, here might be the chilling feck. you get hedge funds that come out and promote their shorts andrew sit ron -- andrew of sit ron research, whatever you think of the guy or not, he came out and said i'm out of the short selling business because i'm getting death threats at my house. if you're a hedge fund, what you're not going to do is tell
anybody ever again what you're short. why should you he's going to go away, so no one knows. >> you never had to. you never had to it was amazing to me that we would see akman get on air it was astonishing to me you had a free pass and you didn't have to tell everybody. now everyone tells everybody i applaud them on one side because akman never had to tell anybody he was short he told people he was short. when we look at sitron, i think the headline was he's not going to publish any more short reports. he's just not going to tell you when he is shortening -- >> fair enough i'm -- you're using him as an example. by the way, steve, just like akman, this is little guy versus hedge funds. you all know this.
nobody likes to take down a hedge fund more than another hedge fund guess what they're the fishes ones to go after their own. then they can maybe take some of that assets. kman got teamed up against by other hedge funds. >> right you know what's amazing to me, brian, is that a lock-short hedge fund, you're always more long than you are short, so you really have to have -- the market goes up, it benefits them more than their bets on the short side so you have to have a couple of bets that are outsizing the market but what the dynamic is going to change, if nothing -- if this continues to ramp like this, is you won't have hedge funds short as much single stocks and they'll just short through other vehicles as we've talked about on the show, but they'll use etfs to get short the names they want to get short. they won't pound the table on any one given name
>> delta one products, whatever it might be. you are a hedge fund how do you think this -- does this have a longer-term effect on the, quote, regular boring stock market, or is this just kind of a bizarre, maybe important, but short-term phenomenon >> i don't think any of us know how it ends. if you think about the hunt brothers and how they manipulated the silver crisis, by stopping managers from being able to buy is how they made that correction, right i think that's what people are trying to do now by saying you can't buy more than one share. this is populism this is techniques in the financial markets we've never had the ability for millions of people to come together in a chat room and manipulate a market what you had before was a bunch of guys in greenwich doing the
same thing with the same aem it is unprecedented. i don't know what the regulator's going to do. clearly you should not be able to short 138% of a company and -- >> yeah. >> the thing people aren't picking up is you can't short more than the shares outstanding. it's 1388% of free flow, which means closely held shares were being lent out well, at 120% a year, you, too, would lend out your shares, right. so these are free markets. you can say the price of game stop at 300 is wrong but there is a market for it because there's someone who has to cover. it's always the right prices in the right market this is what makes it so interesting for all of us. but what you need to do is learn from this. and when you can learn vicariously, it's the best way >> i hope so >> stay away from crowded shorts
>> well, they found a hole, barbara anne i'm old enough, steve grasso's right there with me. remember jonathan rebid, commerce one, cmgi, i guess i'll not say we've been there before but not quite to this scale. we're going to take a break. we'll be back. on deck, it is not just stocks some, rather, insane options activity, may put a little fuel on that fire plus shares of johnson & johnson drop over concern an the vaccine's effectiveness on some of these new covid strains that hit the stock, but tt isha concern of done. that and more when "fast money" returns. want to sell the best burger in every zip code? add an employee.
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all right. welcome back to "fast money. johnson-and-johnson out with the single dose vaccine. there's some question about its effectiveness on new strains of covid. the tests show that their vaccine was 85% effective in preventing disease four weeks after vaccination adults all this as the rollout is
starting to ramp up. 1.6 million doses going into arms yesterday and another million today. if more than one were approved we could see a vaccine boom in the next couple of months, so says our next guest michael ye michael, unfortunately, the vaccine roll out, pretty much like everything else in our lives, have become politicized here are the math, the science we are the most vaccinated big country in the world 1.6-1.6. we're on pace to get a hundred million doses in arms in just two months, basically, at this level. how would you describe the vaccination -- now states are fiing it out the vaccination program so far >> i think you stated it exactly how i would. i believe the can early days that we're talking about here, brian, are going to have a little bit of hiccups but as the
states smooth it out, logistics get better and as we have a lot more vaccines coming, every week, every month, every quarter, hundreds of millions of vaccines are slated for moderna. maybe get it by the summer >> define "boom. >> well, if you look at moddera and pfizer, those two together are slated to deliver 500 to 600 million doses to united states alone, or 300 million people by the third quarter. that should cover more than half of the united states that's a boom. >> yeah. and there's a lot of misunderstanding, and i've been on twitter, saying you don't understand 330 million people let's be clear we're not vaccinating 330 million people you take out the under 16s
maybe later you do them. 25 million people have had it. 25 million people have be vaccinated some people say they'll never take it no matter what do you have a number, a hundred million at-risk adults that have to take it or want to take it? get some baseline or herd immunity, even from one dose >> that that math is right if you've got 150 to 200 million people vaccinated, then you should have all the vaccinations and that should be done at the pace you described, 1.7 a day. a hundred million in a hyundais. that all happens by the summer that's exactly what we're calling for and i'm not saying there's herd immunity number, but if you have that, i think we'll be in a very good place. >> that's some good news, even one coast, 80% effective as well and certainly you're not getting
it and you're probably not transmitting it. so it falls dramatically michael ye, good news on a friday we certainly appreciate it thank you very much. >> thanks for having me. >> all right well on deck we have got an hour long special coming your way at 6:00 p.m. eastern. we're going to hit on every angle on this big story in a way that makes sense to everyone from market pros to knew byes. we're not done yet
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they make biodegradable plastics great buying off >> bonawyn >> core holdings going on sale looking at microsoft >> steve grasso. >> star peak energy. the valuation alone is worth about 70 bucks it closed at 27 today. i call that a guy. >> 70 and 27 there you go all right. bonus hour coming up at 6:00 but options action is next strengthening client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
welcome to a special edition of options action. i am brian sullivan in for melissa tonight. dislocation in the marketplace, whether it's old hat or new to options. if you're new with us here you're looking for smart and substantive insight. we'll do our best to provide that with us is mike and tony our collective mission tonight, gentlemen, if you are ready to strip atwai sound an