>> another late day tomorrow. >> they promoted the "frozen" stars. >> oh, we've got to go. i thought we were watching tomorrow. >> sleep well. thank you. that does it for "closing bell." "fast money" begins right now. we'll see you tomorrow. thanks, guys. "fast money" does start right now. we're overlooking new york city's times square. tonight on fast, a top strategist from usb said stocks have much lower to go. just how bad will it be? they'll be here in moments to explain. something is happening in the u.s. housing market that hasn't happened in 40 years. it could be a windfall for widely held stocks. the names later in the hour. later, the man who oversees $16 billion on behalf of the state of illinois, pulled his money from a number of hedge funds, including bill akman's. first, we start off with a sell-off, the dow tanking 174

points. stocks now officially negative for the year. banks, the biggest loser of the day. now, yesterday we started with the bears and asked them if they were ready to surrender. we start off today with tim as the most bullish voice. did you buy stocks today? >> i feel the need to actually establish that what i have been is someone who says i don't think markets are cratering. i think we're in a very, very high volatile environment. which we haven't been for the last few weeks, or six weeks. we probably have sideways markets for most of the year. there's enormous amount of risk out there. having said all that, i'm relatively hunkered down here. i think in the last four to five weeks we see where equities have rebounded dramatically. all the detail winds from extreme positioning are now over. the reality of earnings season is upon us. the move today in the japanese yen is disturbing. and there's nothing about this that was orderly. the good news here is i think that offers a fair amount of stability for china, in their

whole currency debacle. and that's actually something that i think is actually what's better about markets here. so i remain, you know, somewhat benign here. but i do think this is a very difficult tape, and i think it will be difficult for a long time. >> i think you have to trade it. so this week i wound up adding to a position in kb homes. i felt like the home builders were under pressure. so i added to that position based on the negative headlines in phm. as far as the s&p, 50 handles up or down. until we break 200 a day, i think you have to stay with your longs. if you have compelling longs that you want to get long, i have longer disney under pressure. i stay with my apple. if there are things that you really need to buy, then add to it. but until we jump out of this range, you stay with what's working. >> we remain in a trading range when we have extreme moves in other asset classes. the yen reaching the highest level, and the ten-year treasury yields. >> ten-year treasury down now.

we have inflation running, let's call it 1.5%. take the inflation minus the 1.7% yield on the treasury, you get a 0.2% gdp. nothing's changed. i totally disagree with chtim tt china has completely stabilized. there are still outflows from the country. we've made new lows back in february. i think this is simply a rally in a bear market. >> so by the way, china had currency numbers out last night. in fact, fx reserves increased month over month. >> well, no, but only valuation adjustment. they sold $37 billion. that's a valuation adjustment. >> for people seeing 80 to 100 billion outflow in china, that was a reason for concern. it's nowhere near the same environment. >> it was 37 billion last month. >> you've been saying it's going to 100, 110, the chinese yuan is

in a very different situation. with the dollar going sideways, unless you think the dollar's going back to 110, i think china is actually in a place where we're in a sideways chinese market. >> it's been difficult not leading that charge. what worries me, the bond market is incredibly strong. the transports which led us to the upside january 20th have now been quietly going down since the middle of march. russell underperforming as well. gold a bid for quite some time. the financials can't get out of their way. they had a horrendous day today, led by deutsche bank which has quietly gone from a 20 handle to 15 handle within whisper of the low it made a couple of months ago. my level in the s&p is where i thought it would stop at in the first place 2025, that should be support. >> where are we in that choppy

trading market with today's action? >> i think we're going lower. >> okay. >> but i don't think we're going dramatically lower. china to me ultimately -- the market going down today is not a reason to say it's going significantly further down. that's what i'm saying. >> i'm being consistent with my views. >> i think -- >> that's all i want to say. >> i think there's enough space for all of us to look stupid, or to look like geniuses. it's trading range. for me you also have to have lines in the sand. guy says 20/25, tomato, tomato. have your entry or your exit if you're going to stay long. >> within this sort of market, what shall the areas you're looking at? >> i think it was monday, i mix up my days, but he said ipp would trade up to and we talked about failing at 285. take a look at where it traded up to today and where it closed on the day.

very interesting. so i think you avoid those, but i still think there's headline risk. the gold market for maefr reason i can't identify continues to want to go higher. i think bonds go higher as well. >> the health care sector, i think is a place where you actually have an opportunity here. in a world where i don't think markets are going down, you should be abandoning all stocks. i actually think health care with all the obvious reasons has been oversold after being in a crowded trade. i think it has to continue to be a relatively crowded trade and i don't think it's as crowded. i think it will be very defensive for most of this year. a place where i actually think you have fundamentals that line up with the market that has a lot of disconnect. people will be reaching for food stocks, for staples, and those are things that i would gravitate to. >> executive directory of u.s. usb, julian, welcome to the show. you say the vic should be a 20. the s&p 500 should be around 1970, which is lower from where

we are. what does that path look like to these points? >> that path looks like sort of torture over the next several weeks. >> okay. >> basically because we have to remind ourselves that this is a different environment than the last 3 1/2 years. this is a high volatility environment. you had the rubber band stretched to the down side in february. you had massive capitulation. and, you know, we're happy to see it. we think the markets will finish higher by the end of the year. in fact, when the vics trade back down to 14 where it was yesterday, and we've essentially gone up in a straight line, at the same time the expectations have gone from 2% growth to the gdp at 4%. there's a disconnect that we think there needs to be some discomfort felt. >> after today's session, we see we can go down to 1970, but you still say the markets will finish higher for the year. >> that's right. that's right. basically, this is one of those stories where the investors are

finding their footing. the economy is finding its footing. and it's very clear that the fed is going to err on the side of dovishness, so we don't have to worry about the rates running away on us. when the stocks are trading in the neighborhood of 16 or 17 times, and there's earnings growth potential for 2017, that's a good multiple against the -- >> julian, rates running away from us to the upside. it seems just as bad as they ratchet back the other way. the u.s. doesn't appear to be going higher anytime soon. is that equally as bad? >> that's definitely an issue. i think that is part of why investors are so perturbed by what's happened in the yen. it wasn't supposed to work that way. negative rates were supposed to weaken the currency, but what we're finding out is that basically whether it's cash under the mattresses or what have you, it strengthens the currency, and that's been a reaction that's happened in japan over the course of years.

and the outcome is definitely in question. >> which julian is one of the reasons negative interest rates in japan shouldn't have worked anyway. it's a savings economy. it probably wouldn't work in the same way it would in other economies. but if rates are negative around the world, shouldn't this put an upward bias on equities, especially those delivering an earnings yield significantly better on raa relative basis fr where you have been in a long, long time? >> it should. but the first part of the equation, the stoking of a b more inflation. gold is telling us that that is starting to be an issue. in this environment, that's a positive if we get resumed economic growth. but in this wait-and-see type of attitude is the pullback on health care. that's a sector that's going to grow its earnings in the first quarter, which is a very dicey quarter coming up next week. but also, throughout the year, and it's been left for dead if

you will, given politics, given the volatility in spec pharma, and that you had a major merger break, we think those are cathartic events and health care will work here. >> the s&p 500 sectors, which do you see having the most risk on the path to 1970? >> actually, this is probably counterintuitive, but if you look at it, both cyclicals and defensive stocks got bid up in this environment of the last three months. and that doesn't really make sense. actually, for us, if you look at it, consumer staples are trading at the highest multiples of all time. and that's almost potentially a defensiveness bubble. so if we see news turn around and news get better over the next several weeks, and all of a sudden, perhaps japan intervenes, what have you, the ten-year yield starts heading back up, that sector is very vulnerable in our view. >> julian, thanks for coming by. >> thank you.

>> i like that defensiveness bubble. >> what's interesting, look at the utility sector. that has been a huge beneficiary, where people are coming in and buying yield. but over this week, you've seen a reversal of that. you've seen reversal of at&t, in verizon. some people that i talked to from the currency side of it actually talked about it as being an unwind due to the japanese yen. i didn't know if it was going to be that in agreement, but those defensive trades are looking vulnerable right now. >> i don't think so. >> i don't either. >> i think you get one day they're vulnerable, and some days they're definitely where they usher in a lot of money. the chart looks like it's in nose bleed territory, yet it keeps ratcheting up. you can't get the yield anywhere else. they'll continue to grow. >> i think on the cyclical side, i think i would agree. what i was pointing out a month ago, or six weeks ago, is that i thought the transports were still relatively cheap to their history and they needed to

balance. you can't make a huge argument for transports here. back to, you know, i want to set something straight. when i mean victory laps, after three or four days of market pullback, we're framing this as a bulls/bears debate, and i don't think it is that. i don't think it's a time for that. it's for saying which parts of the market are oversold. in some places even in emerging markets i think you've seen the worst. ultimately i think we're at a place where markets have a lot of discomfort ahead of themselves. >> at what point does coke enter that defensive bubble in your view? do you still like it? >> as long as it stays above 44 1/2, 45, i think you're fine. it does feel like it's breaking out. to steve's point, it does feel like a stock people continue to pour money into. >> coming up, what's next for pfizer? the name that could soon be on its shopping list.

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the dow after the price target cut to 130 from 141. the firm maintains its buy rating. they said the pace of iphone upgrades is slowing more than expected. tim, i feel like we sort of knew this. >> in fact, i think the march quarter is not going to be a good number. i think units will be down 10% to 15%. the upgrade cycle is -- look, i think we're getting in a place where we'll continue to have a lot of buzz around new upgrades. i would dip in my wallet and pay 800 bucks -- >> really? >> it will go up during the show at some point. it's a time i think actually you look at what's going on with the valuation, what's going on with the pipeline, which is going to be more about upgrades. i wouldn't run too far. look, it's a proxy for the tape. we ran up against the 200 today. a very important level for the stock, around 111. i think that is the reason it pulled back. >> i'll be upgrading as well. i think you have enough with

this upgrade and get off the fence. as far as trading-wise, tim just spoke to it. 106 to 110. those are your balance levels. i do believe it goes higher from here. i'm still in the name. >> peter lynch on the desk. >> you know, 106 level is the level i mentioned a couple of weeks ago that i wanted to see it close above, which we got. now what i'm looking for is that level to hold. it's a question of, what the market does versus what apple does. but if we get that level to hold, then we might be tempted to buy some of that. >> are you excited about the curved glass or all that? >> all of those things are so exciting to me. what do they call these things? the ipad. they're going to be popular. >> no question. it's very heavy. >> it's very sturdy. >> i want to show america what i use here. >> those are the letters you don't use. that i get mad at.

>> your apple trade? >> this is how i think you trade it. if it rallies into earnings, you fade. if you sell off, i think you buy. it sounds simplistic. given the move that the stock has had, that's the way you play it. >> 141 down to 130. the stock is at 108. this is what gets me so angry about wall street. everybody wants to blame it on a price target ratcheted down. the stock is way below that now, it's so stupid. it sounds like to me you've got $22 off to the upside. who cares if it's less upside. 20%. that's me without an abacus right now. >> you're pretty good without it. >> exactly. >> good job. not bad. >> leave the abacus at home. will a man pull out of his hedge fund? what has him heading for the exits. i'm melissa lee, and you're

watching "fast money" on cnbc. here's what else is coming up on fast. >> so what do we do? >> that's what pfizer investors are asking. now that its big play for aller gen is busted. meg terrell with a special report. barclay said the new american home has changed forever. >> forever, ever, ever. >> yes, forever. and there are several stocks that are poised to cash in. the names when "fast money" returns. but that is changing. at temenos, with the microsoft cloud, we can enable a banker to travel to the most remote locations with nothing but a phone and a tablet. everywhere where there's a phone, you have a bank. now a person is able to start a business, and employ somebody for the first time. the microsoft cloud helped us to bring banking to ten million people in just two years. it's transforming our world. my dad gave me you know.ares,

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money." pfizer is flying solo of the biggest planned merger in history fell apart yesterday. it's time for much-needed stock therapy with the one and only reporter, meg terrell. >> pfizer in reference to your very entertaining segment last night is probably going to start playing the dating game. they've got a lot of cash. one of the things people are talking about with pfizer now that they're not going through with the allergen deal, of course, they could split the business into two parts. they're expected now to return to their original timeline for making that decision by the end of this year. and investors are really cheering this. if you look at the two business units, they talk about an established product and

innovative product. the established one is older, more slower growth product. obviously the beta one is newer. you can see the innovative product unit which includes a lot of their cancer drugs, consumer products, is bigger by revenue. if you look at eps, the established product business is more profitable. people are saying pfizer probably needs to do a deal in the innovative product unit if they're going to split up. and so of course, the speculation is running rampant who could they buy. a lot of people attribute yesterday's big gain in the ibb to both what pfizer may buy and, of course, we talked yesterday with allergen. if you look at some of the names, jpmorgan, and isi, metavision insight, cancer companies, bristol-myers didn't make it to the screen here, and a rare diseases company, these are the kind of names that people, analysts and investors are floating around.

what are the names people don't want pfizer to buy? it's interesting. this is from mark shownbaum's notes. you can argue all three of these would be potential inversions. there's probably different reasons why people don't want pfizer to buy valiant. but could pfizer still seek to do an inversion by going back to the british drawing board. and people don't want them to do that apparently. >> really, the reason why the pfizer-allergen deal got stripped is because of the allergen deal on the time frame. >> glaxosmithkline hasn't done such a huge volume of deals. they are still big enough. that could be an option. but it doesn't sound like investors want them to try again. >> we don't have our white boards. >> oh, we don't? that was so much fun last night. >> it was. >> meg probably told you that, it would probably be a $120 billion deal, or thereabouts, pfizer to do something like that. which they probably could pull

off, by the way. but i'm not certain they would go that route. i think some of the smaller oncology names make sense. because it becomes very binary. they bought american home products for about 65, $70 billion a few years ago. the reason they did it is because they screwed up when they sold their consumer products business to j & j about eight years ago. i don't think they'll make the same type of mistake in terms of dollar signs. >> if they bought another company at this point, is it a foregone conclusion they'll buy in order to split to make sure the businesses of are of hefty enough size? >> people seem to be leaning toward they will split, but need to be up in the innovative products. they bought hosspira, last year or the year before, and so people are thinking they need to even it out on the innovative side. >> innovation is under fire for

pricing. they're looking at alternatives basically. >> i would say that in this whole space, people have to start pulling back a little bit. because the risk is to the down side. if they start to do another deal with pfizer, if pfizer started to throw something at the wall now, and somehow it gets -- >> risk to pfizer-stock price? >> exactly. i think you have to go back to the safety play. a 3.6% yield. i've been long it for what seems like forever. i think you have to get your sea legs back and maybe buy small companies that we don't know about right now, that don't show up on radar before they take out a big chunk. >> i kind of disagree with that. i think the spin-off of the established global products business is a catalyst. i also put my julian emanuel hat, our last guest, that's much better than me, but i would say pharma is oversold right now because of the political risk. everybody knows the political risk. i think they're in the price. >> how could you know it's in the price, though? we have so much ahead of us.

>> and the average joe can relate to drug pricing right now better than anything that's out there. >> everything you're saying, everybody knows. these should be overweights in this environment. they're underweights. i think it's to your advantage right now. >> what everybody's talked about is why this whole trade, health care, biotech is so complex right now. add that on to the complexity of the market, and i think it's a very difficult place to be here. i've said the biotech index on rallies, is a sell into the election because of the political risk. i get it, yeah, you might -- we know about it, but it's still -- i guess it's a known unknown, to borrow a phrase from years past. >> thank you. >> thank you. barclay sounding the alarm on housing, saying there's a new reality happening in the space. it could mean big news for several stocks. the analyst behind that call joins us next. the best performing stock in the s&p 500 today.

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the dow falling 174 points. the biggest drop in a month and a half. the s&p 500 and nasdaq both fell 1%. the s&p 500 erasing gains for the year. now slightly negative by a point or two for 2016. financials, they were the worst performing sector of the day. here's what's coming up in the second half of "fast money." now one of a client is pulled out of the fund. how much did he pull? plus, we're waiting fed chair janet yellen and officials expected to speak here in new york. but first, we start off with the housing market. a fascinating report today from barclay says homes in america is coming to an end. that could be a windfall for a number of stocks in the group.

steven kim joins us here on set. steven, great to have you with us. >> thanks for having me. >> i thought everybody in the united states wanted a huge house with a huge lawn. >> yeah. well, it looked like we did for a long time. i'd say about 35 years. the mcmansion was really a term that waskind in the late '80s. we did just go through the biggest housing downturn the country has seen. there's two major drivers to this change. one of them is that we are seeing a wave of baby boomers termed empty nesters now looking to downsize. at the same time at the other end of the spectrum, you have millennials who have held off buying, and now that they're buying they're actually skipping over the starter homes in the sticks and willing to pay a little more, get a little less footage, but with more amenities. the results are that you have the two biggest demographic groups in the country converging on the same kind of product. smaller, denser, closer into the city kind of product.

there's not that much out there. >> how to connect this to a trade. who builds these homes? who benefits? >> it's important to recognize there's a change in what people want. the housing stock can only change 1% a year because of new construction, right? the difference between what people want and what's available to be bought means you're going to have to make that up with renovation work. we think remodeling plays are going to do very well in this environment. >> who is doing the renovations? >> it's a lot of jobbers and small guys in your neighbor hood. by i think the best way to play is the home centers, as well as the companies that make the products like cabinets and flooring and countertops. >> does it matter what the economy is doing at this point? or does it only matter about jobs and interest rates? >> certainly where we are in the cycle certainly matters. i think one of the most important things to recognize about remodeling spend is it's most tied to the home price depreciation that's already happened over the last three years. and so as a result of that,

because that news is good, we think this is going to have some legs. also, this kind of societal shift doesn't happen often, and it will have some momentum for a while we think. >> we need the forward, the next years, the next three years, to also appreciate in order for the trend to hold? or how long does the past three years hold for somebody to decide, i'll pull the trigger and change my floor and upgrade? >> we think it actually has already begun. that's the good news here. most of the statistics we cover in our report, you can actually see they've already begun to turn. this isn't something we're saying is going to happen some day, it's already happening now. we think in terms of future spend, we think that home prices are going to do well. one other thought i would put in your head is if we have a change in the way people -- in what people want to buy, that's going to show up as a premium that people are willing to pay for new homes over existing homes. like home prices. so therefore, we think the builders are going to benefit from this, too. >> steven, thank you for coming

by. steven kim from barclays. >> i think that's interesting. the renovation trade. the one thing that i would caution against is if you look at some of the home builders, their business plan is to benefit from the urban sprawl that's been going on. but that has to change. that's why home depot and lowe's in the world look good. me, am i in the home builders? i would take profits in exposure to the oil patch, big run-up here. that's how i play this. >> you jt added to kb homes? >> i did. you have the founder who's trying to kick out the ceo. but what they've been accused of, what the ceo has been accused of is not being aggressive enough on the acquiring side. i'm long both kb homes and polte. >> the housing stock is something that will continue on. sherwin williams and lowe's and home depot, they are expanding possibly better.

the keys about home depot and lowe's, they're not adding that many more stores. you're seeing pressure upwards on their retail space. they're selling more per square foot. >> big ticket items at home depot up 12% year over year. appliances, all these do it yourself kits for the home. 19 times earnings for home depot. literally, unsuccessfully, met an all-time high on monday. i think the price target -- >> could you pressure wash my house this weekend? >> no doubt. >> i like doing that. but it needs to be a tad warmer. because we get a lot of blowback spray. >> for your own comfort it needs to be warmer. >> the gorton fisherman, right? >> the yellow outfit. >> you need to show up saturday. >> see you saturday. from the home to the mall, we've got a news alert.

seema mody is in the newsroom with the story. gap shares taking a deep dive after hours. reporting weaker than expected sales in march. banana, old navy and gap global reporting a big slide in sales. more trouble ahead. the company warning they're entering april with more inventory than planned. something that they expect will pressure gross margins in their next fiscal quarter. you're looking at the stock down about 8.6% after hours, melissa. >> all right. thank you very much, seema mody. you cannot buy one of those yellow outfits at the gap. >> the banana republic, you would think. down 14%. disaster. was it sit tron a few weeks ago? i think they said the gap was irrelevant. i think that was the word they used. correct me if i'm wrong. a lot of things they've been right on is gap that's one of

them. >> every few weeks gap comes out with terrible sales. we've been doing it for several years now. it doesn't seem like they're going to turn around. what's most striking is old navy used to be the outperformer, it's no longer outperforming at all. i would be concerned actually with this report. >> still ahead, more bad news for ackman. we hear from an investor who manages $16 billion, about why he just pulled millions from pershing square capital. right after the break. a bet gone wrong. sitting at this desk tonight, making a wrong call on one of the casino stocks. we hold his feet to the fire right after the break.

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of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet? showing off his sensitive side yesterday. despite his colorful comments, the stock surging nearly 12% today. he's physically talking about a new development which he said everybody will want to enter because it's so luxurious and grand. and so rich people will go there, poor people will go there, everybody will love to go there.

>> yeah. let's just hope it was taken out of context or maybe he's running for president next time, i'm not sure. >> there's no way you could take that out of context. >> do rich people want to be as tan as he is? a sign of affluence, i guess. very swarthy. >> i think what he said, to guy's point, he said it. he does have good color, though. >> who has better color, him or guy? >> the same color, how could you tell? >> tell you what, he was stating the obvious. >> aspirational. >> look at that. that is unbelievable. see how i did that? i went right to las vegas and back. amazing. >> fantastic. >> all right. let's go back to the trade here. >> i shorted tuesday morning

around 94 bucks. my view was actually going into earnings, we had already gotten the guidance on the numbers. i think it's expensive relative to its history. i think the stock is clearly -- there was reason for it to have rallied. it's overreacted. i feel very good about the stop at 108. again, for a stock this volatile, folks, you don't put a 3 or 5 or 10% stop on it. right up to a key level. there was good news to take it up. the news on the las vegas resort is something that's exciting. but you know what, great, let's see what happens. it could cost a lot of money. think of the times we've been waiting for these guys to open a new casino. there's been overruns. if i get stopped out, i get stopped out. i also happen to be long impal against this. >> real quick, by the way, did trade 85 3/4 yesterday. it did go straight down. three times normal volume.

if this thing gap opens lower tomorrow, don't be a hero and try to buy this thing. i would actually be looking to do more what timmy's doing to sell into weakness. a huge run. valuations are stretched. technically a gap open lower won't be good. >> turning now to the pain being felt across the hedge fund community. a very rough year for some of the smartest money around. our next guest is reducing his hedge fund portfolio by over $1 billion. yet another major blow to some of the greatest hedgies around. mark, great to have you with us. >> thanks for having me, melissa. i do want to point -- >> go ahead. >> i want to point out one thing, that you mentioned a couple times one man. yet we're a nine-person board. and a lot of times we disagree on things. in this instance it was a unanimous decision. and we have a pretty significant responsibility here. there's over 130,000 workers and

retired folks who depend on our fund. go ahead. >> that's why we're so interested in this move that your team decided to go ahead with. because from what i've read as to why you're doing this, returns have been terrible for one. your hedge fund is basically the middle man, you're paying fees for lack of returns at this point. and you can actually follow what they do, because everything they do is being made public. why now, though? because this has been the case for a while. >> right. well, the -- our board had a pretty significant cngeover last year. and i was elected chair in september. we've been taking some actions. we looked at our asset allocation. probably the most significant move we made is we looked at the hedge fund category where we had 10% of the assets allocated. over the last three years we paid hedge funds $180 million. and their performance was before

fees, was actually worse than a balanced index fund which we can do for free. so it ended up being a fairly easy decision. we moved -- we ended up moving the money, you know, to sort of maintain our kind of current volatility levels. we moved it to fixed income which is historically that funds like ours have used to dampen volatility and it works just fine. >> do you think that pension funds have moved out too far on the risk spectrum? it was not too long ago you guys were looking at hedge funds and private equity for that matter, with some pension funds out there even going so far as being part of private equity deals. did you move too far out on the spectrum? do you feel like the pendulum is swinging the other way at this point? >> the irony here, though, is, you know, maybe 15 years ago hedge funds were, you know, really went for returns. and were paid, you know, the 2/20 to do that. over the last ten years, really, the pitch has been the volatility dampener where you

actually get equity-like returns with lower volatility. all that ends up happening is there's money sort of parked in cash, and they go long and short. and sort of accomplish whatever they accomplish there. then you end up with a net long position of 56%. and they just haven't been doing any better than an index fund. which we could get for free. as far as pension funds generally going too far out in the risk spectrum, you know, i don't suspect so. the endowments have a completely different model. they have way more assets allocated to things like private equity and, you know, so i -- that's not really my view. >> i want to get some of the individual hedge funds from which you pulled funds. big ackman's square is one of half a dozen or so funds where you pulled money. when you look at ackman and his portfolio, does it shock you that your pension was an investor in the first place given his concentrated positions? what would be the message today

as to why you pulled the money out? >> there was nothing wrong with us being invested in pershing square and active investors. i kind of appreciate what the activist investors do. you know, they get on these boards and i think they really make positive change. but we get the benefits of that through our direct equity investments. if we choose to concentrate in our portfolio on gem electric or whomever, valiant, you know, we can do that ourselves. we can pay a basis point to state street, get that done. we don't need this 2-20 structure in between our fund and the assets. >> right. marc, we're going to leave it there. thanks so much for joining us. we appreciate your viewpoint. marc levine. i think it's a good point, we talk about these filings all the time. we know what the guys are doing. sometimes they come on at cnbc, talking at conferences on positions they're putting on. you at home, you on the set, you can do that, too. >> no way. >> no advantage to being in a

fund? >> you can't tell me that someone can suddenly say, i'm going to ride along with these activists. they're not doing the work on the companies. marc's pension may be a very sophisticated place, i assume it is. they have a lot of people that can do the analytical work. a lot of institutions are not equipped to play equities just because you can play an index fund because you think it's a place to play. i think that's very dangerous. >> a lot of guys are closet indexing. these guys are open indexing. i think the takeaway is, that that 2/20 model in this type of environment is broken. you need people to incentivize to get back into that model. it's not going to be 2/10. >> i don't think it is right now. in fact, i'm sure it's not. >> well, i -- you know, there's two things here. one, can you replicate these strategies at home. and i think with the advent of etfs, you can replicate a lot of hedge fund strategies at home

for cheaper. you know, you can go trade currencies via the etfs there. you can trade bonds via tlt. that's something you can't do 10, 15 years ago. in terms of whether the hedge fund model is broken, i think there's a certain amount of people that can earn those type of fees. not everybody can hit a 100-mile-per-hour fastball, but some people can, so you want to stick with those folks. >> you touched on something interesting. in terms of going up the risk curve, ten years ago i don't think any of the pension funds ever heard of somebody called bill ackman. this is another unintended consequence of our fed, this interest rate environment has forced people to be in things they shouldn't be in. gold is about to skyrocket by another 10% in a little over a month, we'll take you behind the trade. a live shot of an event in new york where fed chair janet yellen is expected to meet with former fed chiefs.

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great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. let's turn to gold. the gold etf is on a tear of 17% this year.

breaking down the trade. hey, mike. >> so we saw two times the average daily call volume in gld. the gold etf. i think this trader thinks we need a bigger chart than this one. the reason was one of the earliest trades we saw was july 125 call. that would put gld over here. they spent $2.29 to buy 10,000 of those. a bullish bet that it will be up 10%. given how much it has moved, just since january, just under 17%, you can see why risking just about 2% of the underlying is probably the smartest way to make your bullish bets here. >> do you think the move in gold could be that big? >> i do. gold is one of those commodities that you're actually seeing an awful lot of demand for. and we know the supply is fixed. you're seeing buying from china and russia, two of the largest buyers over the last year actually. look at the inflation picture. if you look at t.i.p., which is the inflation protect securities, they're expecting inflation coming in the future. you have a demand set there.

you have an uptrend. i still like gold. >> once again, without the abacus, you just said gld is up 15% year-to-date. it outperforms 3-1. >> 43%. >> 46%. so if you do believe that the gold trade is still on, you play with the miners. they're torqued, either up or down. but i do actually, i am long gdx. i do think it's flattening out here. >> remember the other day, it was mike, texas or something, shangri-la, talked about the buyer in the windfall. i don't know if he was buying the wind calls. but mike has been in -- >> it's not mike. how do you know it's not mike? >> oh, aha! >> i wish it was me. >> that is a new jacket he's wearing. >> and cowboy boots. coming up on "mad money" tonight, looking to shine up

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it is time for the final trade. around the horn we go. tim? >> i think you can push down in the iwm. i'm short the russell. >> i said it three times on the show, kb homes. i'm going to make four times the charm. it took a lock time to get to the spot. i think the risk is to the upside. >> i'm going to use my abacus, five times, one more than grasso, i think you take profits on xl. you don't have to short it, but you take some profits in the utilities. >> guy? >> good show for wednesday night. i really enjoyed it. tomorrow's going to be big. you've got elway on friday. it's going to be hot. >> today's thursday. >> good news.

>> so regis. >> i'm melissa lee. we'll see you back here tomorrow at 5:00. don't go anywhere, "mad money" with jim cramer starts right now. \s my mission is simple -- to make you money. i'm hire to level the playing field for all investors. there's 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. other people want to make friends. i'm trying to make you money. call me or tweet mea meal @jimcramer. you know what's amazing about this market? that it wasn't down even more. i'm starting to feel like there's a war brewing, a war on busi