Transcripts For CNBC Fast Money 20170828

Can. Tomorrow galveston is supposed to get whacked inforecasts are wong that could impact the refining industry, which is already hurt. Most of the refineries are about three, four miles that way a bunch of them are shut down. An estimated, lets call it 15 of Refining Capacity offline we dont know exactly for sure, marathon petroleum, for example, was cagy, said we dont give updates. We drove by the refinery today there wasnt many cars around. Thats why were seeing oil drop because if youre not refining, youre not putting into oil. Theres another angle for you and the traders which i would talk about which is onshore. Houston is a humanitarian issue. Thats a whole bigger different issue. Lets focus just on the narrow issue of refining. We talked about oil here dont forget about the Eagle Ford Shale and inland. Its not getting headlines now because of whats happening in hust houston however, seaport security are hearing there are slowdowns in production or disruptions in production because of flooding, rain, road issues, labor problems a lot of the big Eagle Ford Shale players, eog, chesapeake, sanchez energy, apache the storm circling through that region now its going to come back around through the gulf and whack us, guys, but, you know, in addition to Everything Else going long, dont forget about the onshore aspects to this story. Certainly. As we get prepared, i guess, for round two. Although based on what weve seen the last two days, i pray there is no round two. Everybody does. Brian, thank you so much, Brian Sullivan in galveston, texas energy saw the biggest impact in the markets today. Gas prices surging oil settled down about 3 on demand concerns. Energy stocks one of the worst performing sectors in todays session adding to an already rough year just how big of a fallout in energy are we likely to see from Hurricane Harvey and i guess, guy, a lot of it will depend on how much more rainfall is going to fall on texas and louisiana. For that matter. Welcome back, mel great to have you back so the short answer is, its, first of all, you dont want to be glib with this, dont want to make it about profits and los s losses you want to look at stocks, go back to katrina in 05, sandy in october of 2012. The moves that we saw, especially for katrina and energy, were relatively short lived if you go back, insurers as well. Selloffs you saw were short lived and the stocks built upon themselves in the ensuing months so to the extent that youve seen selloffs in names like apache, theres going to be an opportunity hoere. I caution you folks, apache has been going longer long before this set of circumstances over the weekend. This stock made a 52week low today, so they had their own problems going in. But you in terms of the stock mite get one of these capitulation events over the next couple days that getsapach. The low in 2016. You could see a whiplash, in fact, here, but i think we characterize this as a demand story, refined product squeeze i think that has a couple more days, at least that refined product, valero, thats not coming back online. Thats a huge cut youre going to see and with the oil, with the overarching macro commodity still under pressure, thats going to be a tailwind for the refiners. One of the thingses that interesting about what brian just said, again, this is a devastating moeme ining moment,t there could be a boomerang effect for these folks is really sad. The fact that the inland production might be getting affected is a little bit of a solace for the Oil Community where we just talk about the demand impact. C katrina, four to five months demand impact. An industry, theyre getting comfort from the fact its actually becoming more imbalanced, this may knock that balance out to 2018. Im one of those people that said i already thought we were imbalanced so the bigger impact for the oil industry, that bounce that was keeping wti, brent, whatever you follow, in a sideways pattern for nine months, thib could be an issue, folks. You add that, were getting to end of a driving season and other issues. And have an spr sale also. Guys point of apache selling off ahead of this, very defensive play to own the refiners people are making their belts on the commodity wa in the process of moving lower the refibenrefiners, continue t them the are refst of the energy pac, stay away from. I bought some xle on friday maybe i was a little early a. Although, again, down 20 of these names. A lot of bad news has has been priced in. The impact, exaggeration effect of this event, i think on some level was already priced into energy some of those blue chip names like eog, those, to me if we have wti to test 42, lets say, thats the level that lima of rbc gave me continue power lunch. Do we see an xle that moves higher can we see the integrated move higher with 42 a barrel oil the there are a lot of factors at work the authority answer is no im not pretending to have any insight into whats going to happen in crude, the commodity exxonmobil now for the last 18 months has not been trading particularly well. On an overall tape thats been outstanding and crude oil market until recently fwo gone higher to basically side y sideways in my world, exxonmobil bottoms out, i dont think you touch it. In terms of valero, theres upside left in the stock if you go back to 2015, vlo topped out around 72. Given the fact that oil could move lower, i mean, the stars do line up for these guys, probably in terms of the stock prices. And the 3. 9 dividend yield valero is paying out, people are absolutely gravitating for this is a name, the margins are going to improve for them. This is a stock, again, people want to own because its a defensive play thats where the money is going to gravitate toward. Guess what, theyre going to continue to raise their dividen dividends. Dividends going to continue do go higher. Its where the safety money is going to fly into. Thats the key. Safety remember, people need some place to go. Not like people woke up on friday, today, said i want to own refiners totally outperforming. 2. 8 million a day shut down. Thats going to add a lot more oomph to refiners stories. How deep will the Energy Industry feel the impact of Hurricane Harvey Robert Raymond, founder of rch energy, joins us on the fast line from dallas, with the swrout lo outlook following Hurricane Harveys landfall. Robert, great to have you with us when youre watching you know, i know you trade, im sure youre watching the weather and the patterns what are you watching for in terms of the next hit to the energy patch well, i mean, i think, you know, this is really sort of a function i think of how long it takes the refining complex, which you guys were just talking about, to really come back online right . And so theres obviously a lot of shutdown capacity running from sort of corpus all the way toward lake charles. So at some point, were already starting to see it, right, the throughput through pipelines out of the big producing areas like the eagleford and permion starts being affected as well its really the entire supply chain, right, that slows down, if you will. It does back up all the way to the field level at some point. If the refineries arent running and able to take in crude for feed stocks, ultimately you cant move as much through the peop pipeline systems if you dont have enough storage to hold those barrels, at some point you have to start doing li things like choking back or shutting well. The Energy Industry has a history of responding to this stuff efficiently, right, sort of knock on wood, i dont think sort of the flooding we saw as a result of levees and other issues with katrina and rita, right, my suspicion, i dont know this, my guess would be a lot of the Refinery Complex along the Houston Ship Channel didnt suffer anywhere near the damage you saw with katrina and rita. You think perhaps they could come back online sooner than what the market is anticipating right now . Well, yeah, i guess without maybe completely understanding what the market is participating, i would characterize it as sort of a few days to maybe a couple weeks. Sorry to sfwrupt. Interrupt. We got breaking news Robert Raymond eamon javers with breaking news. Reporter hi, melissa, i dont have the breaks news youre talking about i understand theres news thats hitting the wires. I dont have it at my position where im standing happy to discuss once we clear what zpaexactly is a report from nhk that north korea fired a missile. Well get more on that in the meantime,while we chase that story down, lets continue to talk about the impact on oil. Guy, sort of switching gears a little bit, you mentioned the snu e insurers all them trading lower in todays session. Theoretically, theyre in great shape. They could possibly jack up the ple proceed yums late er on. Doesnt give me joy to say it that is effective whats going upon i encourage you to look again. Katrina was august 2005. Quite frankly, insurers didnt really miss a beat little bit of a hiccup didnt miss a beat sandy october 2012 obviously Market Structure a little bit different at the time saw a bit of a selloff they all recovered within a month, month and a half. I would suggest, probably the same now, it doesnt make people at home happy to hear it if youre looking at it from a business angle, theyre probably set up very well to deal with these claims and move premiums higher going forward. Yeah. As far as what robert was talking about with the refiners, i mean, were all watching the flooding, right . Refineries can withstand the wind its really the flooding that damages. They were very proactive. They werent reactive. They were as ready for this as they could be. I think we took a lot of the stuff expectation is this could come back on faster as robert noted id just say, you have to ask yourself whats the multiple these things should be trading at thats where you get back to i think in the environment we have, these guys should be trading at a premium when, in fact, there are more people that need to own this sector. A 15 to 20 premium means valero, to me, has 20 to 30 upside to a fair value. Which creates a league and more after a squeeze into more of those names because Everyone Wants to avoid large integrated names when you look at xle, its top heavy with the large integrated names you really need a bounce to 50 or above for crude. For that morality. Sorry, we got to go back to eamon javers eamon, we want do go to you again . Reporter we have the news crossing from nhk, the japanese broadcaster, theyre reporting the japanese government is warning that a north Korean Missile is heading toward northern japan youll also see another wire flash crossing saying that the japanese government is warning people in northern japan to take precautions against possible north Korean Missile thats describing it as a possible north Korean Missile. Again, thats nhk, the japanese broadcaster, largest broadcaster in japan well ask the white house for updates they have from here on what activity mail terreilitari be taking place in or near ja fa japan. Well bring that as soon as we have it. Eamon javers with this report from nhk that a missile is headed for northern japan. Theres a warning out to japanese citizens to take precautions accordingly. But this certainly this, i tell you what, taking precautions is a lot different than failed and busted launches. I mean, just that headline much more serious. That headline to me is concerning for a lot of Different Reasons obviously, you know, from a humanitarian perspective, i cant even begin to tell you, i will say from a markets perspective, whats been going on in washington has meant almost nothing to this market. Whats been going on in north korea meant something different. I think were in an environment here where not only does this bring in the whole course of Global Disruptions but brings in the course of the u. S. chinese report, also something very disrupt to disruptive to this market. Low liquidity could equal higher volatility this is a headline nobody wanted to see. They did say possible absolutely. This would be very shocking to all of us and to everyone involved if this is actually the case, you see a Missile Launch in that direction. Because a leader like a north Korean Leader wants to survive so this is something he wants to talk his game up, but never actually do anything this would be extremely shocking but if you were on the floor and this headline crossed, what would happen this sounds to me a lot more real than a missile misfire or what have you. So to me, im sitting in a trading desk, im going to respond to this and get short s p futures immediately. This is something that could be catastroph catastrophic you think about the market, tomorrow morning you wake up, if this is sfakt, tfact, the marke going to wake up, Futures Limited down with underscore, if this is a fact, actually happens, if this report is true down 5 to 8 . Scenario. Its a reach for treasuries . Its a reach for gold . Its a reach is it a reach for the dollar its a reach for gold, for sure i mean, again, think about the reality that gold has had. Its not been because of politics it really hasnt and meanwhile, the dollars been in freefall. Golds really only done what its done in the last three weeks, and that, to me, and bitcoin and all the digital conceurrencies get the bit. Id say still bitcoin, buy gold people are looking for more tangible things they can understand theres been an inverse relationship bitcoin is rallies proportionately. I mean proportionately obviously its a bigger rally, higher volatility instrument bitcoin has been pushed over the top by north korea. 100 , but when you start to really see something come to fruition, or when you start to see it come to a head here, critical mass, if you look at that inverse relationship between gold and bitcoin, its hard to deny it. Of course, your mind goes to defense players. Which have been unbelievable stocks to own for quite some time i mean, whether this is real, or not, those stocks will in my opinion, will continue to do president jump jutrump just mend boeing in the presser just now so those stocks have all this is Energy Positive at the end of the day, this is actually going to be something that could be a mitigating factor why is Energy Positive . Walk me through. This, to me, puts more of a bid under oil, Global Disruption fears into, i think, at least the calculous at a time when people are questioning demand. You can worry about supply. All right, again, the latest here we have right now, this is a report from nhk, the japanese news agency, that north korcrek fired a missile to northern japan. The latest here, according to the bottom of your screen, is its passed over jo papan a story were monitoring very closely. Well bring you the latest as soon as we have it. Coming up, more coverage on Hurricane Harvey, how the auto market could be under Major Pressure following the storm. Plus amazon making a splash at whole foods stores today with dramatic price cuts. How do the low prices stack up against the are rest of the grocers . Later, gileads acquisition of kite pharma sent the entire industry into a frenzy the traders will weigh in on which stocks in space could be next to make a deal. Much for fast money still ahead. [car tires screech] [bell rings] thats why at comcast were continuing to make4 7. Our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Welcome back to fast money. Want po mention moves in the after hours session, reports from nkh, japanese news agency, north korea fired a missile that had been headed for northern japan. The latest headline is its passed over japan. Well get more clarification, bring it as soon as we have it. In the meantime, take a look here, the etf that tracks the vix is up 2. 5 gold, a safe haven bid, fwrksgl higher by pnt. 6 . A day when goal actually hit new highs, right, as the tladollar index hit a 16month low not just gold in a vacuum. No, i feel like ive been saying this more, for a guy investing in emerging markets when gold, Central Banks pushing up gold since 2003, ive been long gold the last ten years when i look at what gold has had the opportunity in the last 15 minutes, had brexit, had trump, youve had north korea and youve had a dollar that basically went from 103 down to t 9d 2, looks like it could break lower, gold is up 3 during that time makes me wonder why i want to hold gold. I dont think you should go crazy on gold, sorry, folks. Plao get defsiensive, do it without taking profit off the table. This is a game of ifs if this is true, if its true the missile passed over japan, what do you think the reaction is on the floor tomorrow. I think somewhat muted. Im not saying this to be to be, you know, really cavalier about it, but you need a missile to hit something in order to get that selloff date. Then you get your facts together or a response or you need a response a response. Think about where the market was two weeks ago when we were really at the peak of this i can just tell you, emerging markets asked questions later. Traded down h we werent close to a missile. There were some threats, chest pumping. During the middle of the day, one thing. Were going to have a whole night to see what exactly is going on when we trade the futures tomorrow, a theres no volume. Im just saying i think you have a lot more. Could see an overnight issue tomorrow i think you have a lot more digestic tive time. A failed launch is one thing. This is a provoking shot we dont know whether it was intended to be japan or not, it was a successful launch of a missile that went over japan in my opinion, its incredibly negative. You think i think its a its a start of a conflict i think its a provoked launch in my opinion where its just United States versus north korea, would you rather have a conflict where its china, russia and the world against north korea . Isnt a missile over japan effectively with the u. S. . A conflict with the United States and with everybody else correct. And with everybody else. So thats a little bit of my point, right i mean, so the response is going to be super important. So, lets see what kind of response we get out of washington quharks ki washington, what kind of response donald trump gives to this event i look at it and say thats a provoked response, a provoked launch, in my opinion. It was a successful launch if it wasnt aiming for japan, i think theyre trying to be provocative. I dont think anybody provoked them to do it. I guess theyre provoking us essentially for a response is my view. The timing is interesting given the events of over the weekend, with the so were fighting battles on many fronts. Obviously none of us know really whats going on. I do think its the incident is interesting. The response, to me, is what will drive the markets one way or another. The response from the United States right. The response from the United States or lack thereof. Were speaking on we dont know all the details if what were saying isnt true, the response from the United States and other nations will be interesting. That, in my opinion, will drive the market moving forward. Again, this is according to nhk, so we are all trying to get to the bottom of this one report out of ja fpan that north korea fired a missile that has according to nhk passed over japan at this hour. Still ahead, well continue to dig through the destruction of Hurricane Harvey. Up next, weve got an indepth look at what it could mean for the auto industry. Im melissa lee. Youre watching fast money on cnbc, first in business worldwide. In the meantime, heres whats is else is coming up on fast. Lets make a deal. Thats what gilead did today spending 12 billion to snatch up kite pharma so which companies will be next . Its a special report. Plus the suspense is killing me. Dont worry apple fans might not have to wait much longer for the new iphone weve got the latest details on the smartphone makers big event. Much for fast money after this because, when you really, really want to be there, but you cant. At cognizant, were helping todays leading Media Companies create more immersive ways to experience entertainment with new Digital Systems and technologies. Get ready, because were helping leading companies see it and see it throughwith digital. Back bato fast money. Moves in the after hours session. The futures are closed the etf that tracks volatility index, that is up in the after hours session. Gold is up after a very strong session today. Weve got gld higher by just about. 7 of 1 but, again, these are reports, according to nhk, that north korea fired a missile that has passed over japan. Were looking to get more detail and for that, we go to eamon javers in washington eamon . Reporter yeah, hi, melissa these reports crossed the wires a little bit after the top of the hour litt little bit after 5 00 p. M. Eastern time here at the white house. Were still waiting for an official response from the white house. You can imagine that this has triggered an enormous set of steps inside the u. S. Government and over at the pentagon in terms of verifying the trajectory of this missile, where did to go, where did it splash down, what was the intent, what other activity are the North Koreans engaged in right now or contemplating righ now . Then a series of decisions about how exactly to respond to this clearly, a potentially provocative act by the north korean government. Well wait for the official u. S. Response, also the japanese and south Korean Response as well in the coming minutes and hours all right, eamon, thanks for that keep us posted here. In terms of other after hours action movers, we of course look at the currency market, the very liquid market that trades all the time were seeing a spike in the yen, interestingly, against the u. S. Dollar the yen is traditionally a safe haven currency in this context, does that make sense to you, tim . Well, it not really. In fact, i think after the move that the dollar had today, i would be expecting the dollar to rally here end of the day, youve had first of all, oversold conditions. I think the yen probably is something thats going to, you know, depending on what we learn about just where this rocket has gone, i dont know that the yen has to weaken dramatically, and yen typically, remember, positive carry trades have been where people have been borrowing then investing, borrowing and investing elsewhere, so you could see unwind of those trades which, if anything, could have the yen strengthening. When theres a riskoff moment, the yen tends to strengthen. All right lets bring in medal of honor winner colonel jack jacobs, joins us now on the fast line for me on this developing story. Colonel jacobs, thanks so much for phoning in we do appreciate it. Yeah, good afternoon. Whats your initial take on this report and what it could mean in terms of provoking other countries to join in some sort of conflict . Well, the first thing is that theyve done this sort of thing before the second thing is the United States has been ignoring them for a little while and they dont like that very much. One of the reasons they do this is so the rest of the world, particularly the United States, and its allies will take them seriously. So its not surprising the third thing is that whats really important from our standpoint is not that theyve shot a missile, but what kind of missile it is. You know, up until recently, theyve been using liquid fuel rockets. They havent had very much capability to use mobile platforms to deliver munitions, and lately they clearly, they developed solid fuel rockets which means that anybody including the United States wouldnt have very much warning, theyd be able to roll it out on a mobile platform and shoot it from just about anywhere and wed have far less warning at the end of the day, what the kim regime is interested in is encouraging the United States to leave them alone theyre a continuing criminal enterprise they just want to stay in business to the extent that they can harass the United States into leaving them alone and not conducting a first strike to eliminate the regime, consolidate american influence on the peninsula, thats all they want. Thats not all they want, but its what they want in the immediate term and thats the thats the principal purpose of these histrionics and the missimissils i dont want to min niimize the threat theres clearly a threat countries like south korea, to a greater extent, japan are very concerned about the ability of the United States to defend them, but at the end of the day, thats what the thats what the North Koreans are after. Colonel jacobs, what does this tell us about north koreas missile l technology and its ability to actually strike japan or some other close by target if it chooses to do so . Well, thats a very good point. It would appear that their Missile Technology has been improving steadily, and improving to the point not so much that they can hit seattle or Something Like that, but but as you suggest, being able to hit some place in the eastern pacific with very little warning, extremely dangerous situation, and its dangerous to the extent that its trooifing k countries like japan, for example, to talk about rearming. Were not so concerned that we would conduct a preemptive strike on north korea, but as north korea gets more aggressive, gets more technologically competent, gets into a position, perhaps, where it can fit a Nuclear Weapon atop a missile and strike have the capability of striking other nation states in the eastern pacific, it drives those countries to decide that the United States is not necessarily going to come to their aid and countries like japan, for example, want to be a able to arm themselves and be able to tee fend themselves against a north korean strike which may not have an american counterstrike so this is whats concerning less that north korea will be able to hit the United States because its not likely theyll want to do so because with our counterstrike will be extremely difficult for north korea. Colonel jacobs but theyll be able to strike our allies in the eastern pacific. Colonel jacobs, its tim seymour. Doesnt abe need a strong show or support from the allies and if so, what is that response yeah, it does because the japanese are very much concerned about what they perceive to be our maybe not our clearly not our inability, our reluctance to strike north korea. Whats going to happen probably increase joint exercises in the seas around south korea and japan, and what should come as an affirmation of american commitment to defending japan. So what do you think the u. S. next steps would be or should be . Well, i think we are and should send an increased naval presence in the region, although as you know from the news, they only have 177 ships and they keep running into one another or keep running into other maritime assets its an extremely dangerous situation. We need to straighten that out an increased naval presence in the region and declaration from the National Command authority in washington that we stand by to defend our allies and others in the region. Without that, if theres silence in washington colonel jacobs, are you there . Yeah, yeah. Sorry. I lost the signal briefly. But without an affirmation of defense from washington, the next day or so, i think the japanese are going to get very much more concerned than they already are. Absolutely, colonel jacobs, thanks for calling in. We appreciate your time and a nal sis on the situation colonel jack jacobs. We have a statement from japanese Prime Minister shinzo abe, said hed like to do all in his power to protect the japanese public after north korea fired a missile that passed over the countrys territory. Lets go to eamon javers who has yet more details on the developing story. Reporter thats right, were getting a little Additional Information crossing the wires from nhk, the japanese broadcaster. Theyre reporting the north Korean Missile broke into three pieces and fell into the waters off of japans hokkaido. Hokkaido is the northernmost of the japanese main islands. The your tip of japan. So, just due east, really, of north korea, itself. Little bit to the northeast of north korea. So if the missile were leaving pyongyang, it would traverse the sea of japan then over hokkaido island and out into the broader pacific ocean. The japanese media now reporting that north Korean Missile broke into three pieces and fell into the waters over japans hokkaido island. Thank you, eamon javers meantime, nbc news reported that a south korean official told nbc news that south korea and the u. S. Intelligence offices are analyzing the details about this launch theres still a lot that we do not yet know, but we are getting more details about this. I think the point that colonel jacobs is making about how the technology, the Missile Technology that south korea has that north korea has, excuse me, that north korea has, may be more advanced than we thought. May be progressing faster than we naught. I think the scariest part about that, most american, you know, americans dont understand this, its not about them being able to send a missile over and hit the United States because currently within kae lly we ca. AntiMissile Technology that allows us to intercept that. The problem is theyre very close, probably four, five years away from being able to hit a satellite. If they can hit a satellite, they can take down our antidefense mechanism so we cant defend ourselves under those circumstances. In my opinion, time is running out. North korea could have done, it went from just a u. S. north korea issue, even though the world was involved but i think theyve expanded that now. Theyve included too many other countries. Its a terrible headwind for them i think its a terrible mistake for them used to be just u. S. Its not anymore. Right at the same time, it didnt make landfall yet i mean, it didnt make landfall at all if this is true, it broke into three pieces landed in the ocean. Maybe thats the bestcase scenario in a situation like this. I understand what youre saying but i dont know if success or failure in a launch is the actual point. Its going back to the original comments of the first few minutes of the show, its the response from either the u. S. , china, soviet union, south korea or some of the four. I cant speak to what its going to be. Again, the success or failure of the Missile Launch, but what do we do in response . Japans expected response, what are they expecting us to say in response . If it doesnt act into the same terms theyre expecting, that could change relations in general. A lot of moving parts here. I dont think anybody really knows where trumps red line is here, too. Thats why two weeks ago, this was an issue for the markets, and to me, whether this was an icbm or whether this was a cap gun, it was aimed at japan and it blew up it blew up in the middle of the water. But the intent was there. Right. So, you know, whats the red line you know, how are we going to respond . Japan is one of our strongest allies their Business Leaders have been in washington standing skid side by side with trump making a big deal out of their support to america. I mean, you know, to underestimate the impact of whatever this was that there wont be a response from the white house right now, which feels like it is being provoked, this is the difference between this administration and the other one. They will take this personally and they will respond. Im glad you mentioned china. Do you think it puts more pressure on china just because it would be perceived that the world that more countries are involved than just the United States, so, therefore, they have to i think it has to. Hasnt done anything so far this has always been President Trump, verbose as hes been on this topic, he also said its a china problem they should be handling it more readily than theyve had to already. And now with a bunch of other countrie really puts a lot of pressure on china. Interesting to see what chinas response will be in terms of tomorrows session, were at an s p with just 2 from the highs. Right. From record highs gld, by the way, is at session highs in the afterhours sessions is this a time take a look at this, i dont care if its true actually, i do care its true, but just the thought of that makes me maybe want to pare back risks. I understand what youre saying it does make sense its logical to have those feelings and inclinations but i would say, again, the last seven years, im not saying weve seen things of this magnitude, but we have seen stories that rival this magnitude and the market has sold off within three to four days the market is back to making an alltime high again. I dont know if that will be the case this time but history suggests that selloffs of any magnitude given headlines have been opportunities to buy stocks ill say this, i mean, were in the last week of the summer nobody has switched on volumes are very light the s p today closed again below the 50 day its been below the 50 day for seven of ten sessions really for the first time we had this period back in april where the s p broke town technically. Say what you want, i dont think 2 off the highs is reason for people to freak out. But i will just say, Technical Levels for this market, this is an s p thats not been able to retake the bogey that actually stayed above for almost all of the postelection market environment. I think the technicals, you look at the transports, we talked about the things that at least have traders and people to look at some of the market signs. These are not reasons to say with this news, in the last week of the year going into the worst month of the year for performance in history, why you have to feel like a hero here. Dont have to be a hero, you dont want to make these this is a trading show. You dont want to be a hero. To guys point, i think this could be a tradeable event here. Sure. To all the points you just made. No question. We have seen some support tradeable event, though, steve, implies youre going get a market move here. You are, you are. I think you are going to get a market move, but to your point about the 50 day, we stopped on a dime on the 100 day so thats been your support. If that breaks, then you look at a 5 drop that gets you around from top to bottom down around the think its interesting the s p has not retaken that 50, this is the longest period since the election we retraced off that balance. The 100 flwas perfect there n reform of tax policy, we popped basically 1 in the s p. So this is an s p thats fragile, but the risk, to me, is still through the upside can you see a drop i think the drop is viable. We have yet to get a response from the white house about this north Korean Missile launch. We do have a response of some sort from japan. Japans chief cabinet secretary suga saying japan to take appropriate steps as needed regarding north korea missile. What does that mean nobody knows. North heres another headline north korea Ballistic Missile an unprecedented and grave threat so obviously this is a developing story well bring you the very latest as we have it. Meantime were taking a break. Still ahead, more onhi ts story, north korea launched a missile toward japan much more after this break well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to wealth management. Welcome back to fast money. Following the developing story that broke in the past hour that north korea fired a missile which has fwogone over japan, broken into three pieces according to nhk and landed in the water. Lets bring in hans nichols, pentagon correspondent, for the latest on the story. Reporter were waiting for confirmation whether or not this was an Intercontinental Missile or intermediate range missile. It went well east according to japanese resources, japanese press, went well to the east but the northeast of japan that oviates this threat that king jongun made saying he would send it to guam which is the southeast. Those are the tactical sides of this the fact it broke into three pieces could mean it was a high loft, which means they sent it high up in the air and brought it back down, could mean it broke up during reentry into the atmosphere north korea twice now has successfully done some form of reentry you get different views on how successful that was. It did reenter the atmosphere theres an open question on how maneuverable this was. The fact this splintered into three pieces doesnt give you a great deal of confidence this missile was successfully brought down back into the atmosphere. Guys, taking a stem back on the policy implications, a week ago we had secretary tillerson two out of his way to praise the restraint from north korea we also as late as tuesday had President Donald Trump in phoenix saying he thought kim jongun, president , leader, i should say, of north korea, was starting to respect the United States and it looks like there may be a little bit of respect coming from them, and then since then, friday night we had three missiles that were launched, projectiles. Those looked like shortrange, from north korea then the one today which seems much more serious because they lofted it up and over japan. The question is, whats the response going to be from the allies in the past, youve had south korea, japan and the United States make sure they have a tripartade response. Thats the key question to watch in the next 12, 24 hours also, whats the official diplomatic posture from the Trump Administration are they open to negotiations . Do they want to praise kim jongun . Are they going to go back to president s trump fire and fury, his tough talk frankly his saber rattling well see what that does to markets, what that does to stability around the region. Guys absolutely. Nichols. Hets bring in professor at the school of government mr. Am bass tor, thanks so much for joining us tonight thank you our nbc pentagon correspondent raised a lot of issues in terms of what the response should be, what the response could be. What do you anticipate from the United States and from its allies i think first the United States, the Trump Administration, will move very quickly to remind the North Koreans that theres a defense treaty between japan, the United States, from 1960. The United States pledged to defend japan and as your correspondent said, also pledged to defend south korea. So i would anticipate a strong statement from those three governments in seoul, tokyo, and washington, to let the North Koreans know this is unacceptable second, youll see a quick move by the United States to convene an emergency meeting of the u. N. Security council to try to produce International Condemnation of North Koreans. I think, third, to go back to xi jinping and the chinese leadership and remind them that the North Koreans right now are engaged in very dangerous, very provocative activities and it does require the chinese to use some of that economic leverage that they have on north korea. I think thats where youll see President Trump and secretary tillerson hit. Do you think this is enough to bring the chinese into the fray in terms of further exerting its economic leverage its been reluctant thus far. It certainly has. Weve seen some movement from the chinese. They clearly are frustrated, beijing, with the north korean government they have not invited kim jongun to beijing they believe hes barely in control. I think that its one thing for the North Koreans to be threatening, as they have for many, many years, actions against south korea. Its another to fire a missile across the territory of japan. The chinese have a very uneasy relationship with the japanese, themselves, but theres major trade occurring, of course, between china and ja fpan and south korea and china. The chinese dont want to see that interrupted i think youll see the chinese join the condemnation with the u. N. On the rules of engagement from defending japan, the treatys in place, this was a missile clearly launched toward japan. Does there need to be a direct hit . This obviously missed them, thank god. I look at it, say, rules of engagement, they sent a missile toward japan. Japanese airspace. Dont we have an obligation to make a stand and defend directly based on that scenario . Well, you know, the way this works is the japanese make that call the japanese have a very powerful military, as you know, particularly their air and naval capacity sophisticated sense of their own defense needs and if they felt that it was necessary to bring the United States in, they would certainly do that. In this case, you know, countries in the region are accustom to this provocative bravado from the North Koreans but this i think is different. Its different because it was fired over the territory of japan, not just into the sea off the coast of japan and clearly, if the japanese want a strong statement from the United States, they get it, if they want strong action from the United States, of course the United States would have to consider that. Thats not the case right now. Is there room, still, mr. Ambassador, at this point for a diplomatic response, one that does not push the limits in terms of engagement . You know, i think ultimately where secretary tillerson has been headed is where the obama and bush administrations were. Ultimately, they do want some kind of negotiation to see if they can freeze north Koreas Nuclear program in place i done think anybody believes we can convince the North Koreans to give up their Nuclear Weapons entirely at a moment like this, when theyve done something thats so egregious, so wrong, so dangerous, i think youre going to see a united front from the u. S. , south korea, japan, and china. The russians will have to join in a Security Council to condemn this and try to make sure kim jongun does not repeat it because as your questions imply, the japanese have a right to defend themselves. South koreans have a right to defend themselves. The United States has defense treaties with both countries it cannot be in the interest of north korea to see an escalation of violence that would lead to some kind of conflict. I dont think thats where were heading right now. But if they continue this, then, of course, those governments are going to have to decide how they defend themselves if any of these missiles actually hit cities or killed citizens or harmed the population in any way. Mr. Ambassador, thank you so much for phoning in. We appreciate your analysis. Nicholas burns, former u. S. Ambassador well have much more on this when fast money returns. Im 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. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. Looking for a hotel that fits. Whoooo. Your budget . Tripadvisor now searches over. 200 sites to find you the. Hotel you want at the lowest price. Grazi, gino find a price that fits. Tripadvisor. Welcome back to fast money. Want to go to hong kong and check in with cnbcs Business News the markets, of course, set to open actually we just lost him. Well try to connect if a little bit. In the meantime, we have a lot to digest with these reports or actually its confirmed now north korea fired a missile that has gone into japanese airspace, flown over japan, broken into stlee pieces and fallen into the pacific ocean. In terms of tomorrows session, what do you watch first, tim emerging markets traded up 3. 5 , ask questions later. This to me is the same news as a couple weekses ago in the same marketplace. For asset classes. Some have had a great move also the dollar. I think the dollar strengthens on this. No question about it those are the things i watch how big are those moves . They may be trading opportunities, absolutely. I dont think were in a different place than where we were two weeks ago and if anything, trumps red line has been that much closer. Hold on, we have reestablished with jeff cutmore. Jeff, whats it look like in asia in terms of the open . Well, its interesting, we saw yesterday at the start of the trading session the south korean markets actually reacting to that news, two or three, potentially, missiles being fired here i think what well get early on in the session, of course, is another bout of riskoff trade having said that, you know, we did finish positive on a lot of these markets by the end of the trading session here, so increasingly investors in asia are willing to price in these Missile Launches back to you, melissa. All right, geoff, thank you, Geoff Cutmore in hong kong derisking your portfolio gd dprx, tadax. Xlu if you want to redisk. Stick wit gold. Mad money starts right now. My mission is simple to make you money. Im here to level the Playing Field for all investors. Theres always a bull market somewhere, and i promise to help you find it. Mad money starts now hey, im cramer. Welcome to mad money. Welcome to cramerica other people want to make friends. Im just trying to make you some money. My job is not just to entertain but to educate and teach you so call me at 1800743cnbc or tweet me jimcramer. Nobody wants to profiteer off of a hurricane when youre dealing with a Natural Disaster thats killing people, th