have the time to do it. if you have child care to go along with it as well, a really good idea for busy moms. >> in that case, it hits all the right buttons. zumba still in aisle nine has me. travel to costa rica in the coffee aisle. >> and get your banana and green juice afterward in the supermarket. that does it for "closing bell." "fast money" begins now. "fast money" starts right now. i'm melissa lee. your traders on the desk are tim, david, karen and dan. tonight on fast, the number of european financials trading well below their lehman brother lows. muhammad will be here to explain. a mad dash for cash. bank of america said investor cash levels are, quote unquote, consistent with the recession. but that may not be a bad thing for stocks. looking for yields? one top ranked portfolio manager said he's got the answer.

but it could come at a little bit of a price. we start off with the markets here. we had an interesting move, negative yields around the world, the ten-year german bond yield going below zero for the first time ever. tim? >> yes, i get it within the european union. we talked about this, other places to trade if brexit happens. the periphery was selling off in yields. if you think about what happened in the u.s. bond market today, we got very close to the february 11 cloes on the ten-year. and then traded back. interday it was ugly. same thing with the s&p. ultimately settled at the important 2075, 2076 level. ultimately i think markets right now are digesting the fed. even if the fed is out of the picture for tomorrow. yes, they are. they're going to make a

statement. i think this is something that's going to inject more volatility. >> this is the fed and not about brexit next week. >> i think it's the entire mosaic. >> i think when you talk about equity volume here in the u.s., people talking about the move in the vix yesterday. basically focused on the fed and brexit in the next week. no matter what happens, you'll see things calm down a little bit. especially with the lack of movement in the s&p 500. there was a lot of positioning. i think i sound like a broken record here, guy is a broken record in this seat, too, i'm not a believer. i read the headline about buns going negative the ten-year. look where the u.s. ten-year yield is going, it's just not a good setup. when you look at equities, the places where sovereign yields have gone negative, they've acted very poorly for the past year, since this has been the trend. >> and we have financials really taking it on the chin here. you look at the regionals, down 3% pretty much across the board. >> a lot of things went wrong

today. there was also this credit issue of a tick up in credit. >> synchrony. >> yeah. that was something actually important. because we have really dismissed credit issues entirely. i think the move was big. but on an absolute basis, it's still a small number. that wasn't great. oil down a little. it was sort of a nothing good. >> nothing particularly good. >> do you like the banks here? i like the banks. it looks compelling to me for a short-term trade. we have to get some things out of the way in the next couple of days. >> last week -- >> short-term trade. that's what we do here. >> what is the catalyst short term? >> like the airlines. airlines are oversold. they've been pushed down so low -- >> really oversold. >> i tell you what. we can let the prices show in the next, you know, week or so. i will say, the banks look oversold. and then you lay it out.

i think we're getting to the point, again, we talk about this, about positioning. it's a bull positioning. how people are led up to sort of this state of affairs. >> i will say, what i see from markets right now, relative strength indicators are momentum gauges. even of the s&p and dax, we're at the levels when we were back at the lows. fund managers are sidelined. the bull/bear indices and sentiment readings have gotten to a place where people are expecting. brexit is priced in it seems. we don't even know what the outcome is going to be. to say that things aren't oversold or overdone today, yes, i would agree with that. but i don't know why you have to buy banks. >> we have a lot more to unpack in this conversation. breaking news on a major development for chinese stock market. seema mody has the latest at headquarters. >> melissa, thank you. the benchmark provider rejecting the inclusion of chinese mainland shares into its global

index. this is coming as a big surprise. somewhat upset to investors. betting on the inclusion of chinese mainland shares into the global index. specifically the emerging market fund, well tracked by our investor audience. the msci saying that over recent months, chinese authorities have introduced significant improvement in the accessibility of the china air shares global investors. they touched the major categories previously cited as the impediment to inclusion. despite the progress that these chinese authorities have touched on, the reforms they've made to their market structure, it seems msci is delaying the inclusion of china shares into the emerging market index. >> thank you very much, seema mody. once again, second year in a row where msci says no. you know, we were talking earlier on "power lunch" making the point, and you were making the point, there has not been a

run-up going into this potential inclusion date we saw last year. so investors may not be caught offguard by this decision. >> and if you talk about the massive respect to the local stock market in china, there's been a lot of quotes in the press over the last couple days, they're not even talking about stocks anymore. we're down 40% from where we were. essentially you've dragged sideways around 3,000. do i think that the authorities or essentially the folks that are there to add some tranquility and smooth out some of the volatility are at play here? yes. just to be clear at a time when all we need is for the chinese market to implode, i don't think this is a driver for that. for eem, it's not even in the eem. 26.6 without the market. >> what is the mechanism where they decide to include -- is it once a year thing?

>> they are -- there's an annual review. they're basically reviewing a number of different market factors which include transparency, which includes essentially accountability, ownership stakes. you know, in china, look, market volatility suddenly a company stops trading its shares for three months, that's the kind of stuff that if you think about what's gone down, and what's going down this year, they are probably saying, you haven't made -- >> maybe coming into the market is more troublesome. the fact that there's a national steam of state-backed funds that propped up the markets whenever they're called upon -- >> i don't think china is the only space, by the way. i'm not going to name who they are -- >> that is still what's going on here. we'll have the msci on later this hour. from your standpoint -- eem looks better because it's not going to have more china in it. >> we talked about this when

alibaba was added to the em. i was excited about that. i like trading the em and those names. i think that these vehicles are so useful. i'm a big fan of the fxi, too. i have a bearish position -- i guess what a lot of people want to see, they don't want to see the adrs, they want to see the, you know, the locals. then they don't have to -- there's not that spread between the two of them. i don't care. i'm expressing a view, if i have a bullish view or bearish view, that's how i'm expressing it. the fund managers, they can own locals, and that's why they would like to see the inclusion in the hedging vehicles. >> the tracking for the active guys, it's going to be an absolute pain for them to do. i look at the fxi. i love it once this is announced. i think the fxi will have a massive sort of rush to it from the standpoint of a move higher. although it's going to be a gradual inclusion, i think you could see a move higher in the

fxi. >> i think the other dynamic for the chinese market is the connect between mainland china and hong kong. a driver for big cap names. i'm long for three of the names. i do believe in the consumption story. i believe china mobile will never be something i'll ever understand. but i think it's actually a company that continues to weigh on the consumer and be part of that. >> for more on this, let's bring in muhammad, chief economic adviser at aliana. what do you make of this news? is this actually -- given what the performance of the china source has been, stocks down 46% or so, could this actually be a blessing in disguise when it comes to volatility globally for equities? >> yeah, i think it's a blessing in disguise in two ways. one is that the chinese stock market is still quite frothy. and you don't want to increase

the concentration of the eem too much. having said that, the big hope had been for the wto effect. if china is subject to global standards, it would improve the functioning of the market. you talk about transparency, accountability. the hope had been the msci could act as a force for improving the functioning of the market. and that's not going to happen quite as quickly as it would have other rz. >> mohamed, there was an investor survey out today. we were talking about the cash flows being consistent with the recession. they also polled these investors about what risks they saw to the market, and among the top three risks was china. china defaults or china instability in some way, some sort of a downturn in the economy, along with brexit. and in quantitative missteps. in your view, of those three, what is the biggest risk? >> brexit is right in front of us. it's binary. we'll know on june 23rd one way

or the other. it's a risk for two reasons. i think one, it would mean no more growth in the uk and no more growth in europe. with someone isolated from that, we're not going to be isolated from the massive increase in fx volatility. this is about fx volatility ultimately. if there is a brexit, it will move in a big way. and the euro will move. so i think the immediate risk is that of brexit. >> so let me just follow up on that, since you mentioned fx volatility. for the u.s. markets, is that a major spike in the u.s. dollar? >> for that, it will be a major spike in the u.s. dollar. it would be a sell-off in equities. a realization there isn't much that the fed can do, given that this is a structural change to the global economy. that's the concern. it's not economic. i don't worry about us being dragged down by lower growth in europe. but i do worry about our stock market being exposed to volatility and to a much

stronger dollar. >> mohamed, it's karen. you said the outcome is being binary. it seems they vote and either they stay in or we enter a period of up to two years of a lot of uncertainty. so it's not the kind of thing you see a big leg down and then it's over. i think it would evolve over a couple of years. and uncertainty for a prolonged period, that's not a good thing either. what do you think? >> karen, i agree with you. my hope is that there is a plan b being worked on. there's a good reason why they can't announce it. because if they announce it, they may actually end up by getting the result they don't want. i suspect both in london and in brussels there's a work on plan b. it could look like a cessation agreement, where britain would retain some of the rights it has right now. think of switzerland of having a cessation agreement. but it wouldn't be full membership. i think you'll see an

alternative come up pretty quickly. the worst thing is knowing there is no eu membership and not knowing for two years what's going to replace that. >> mohamed, by the way, we just wanted to point out to the audience that we're showing an etf that tracks china "a" shares and it's trading lower by 2% in the afterhours on this decision that msci will not include china "a" shares in the indices. mohamed, i want to follow up in terms of the impact. we look at some of the european banks. they've been trading horribly for a long time. right now, the likes of a deutsche bank and credit suisse, they're approaching lehman brother lows right now. what does that tell you us? and do you think brexit is a thing that could be the catalyst to the negative here for them? >> if you're a european bank, year's hit from both sides. one, what's happening to the yield curve is devastating in terms of your ability to generate income. two, credit concerns raise questions about your balance

sheet. three, there may be a major change in the way you can operate within europe. so it's not a surprise to me that european stocks are under so much pressure. you know, we've seen that before. we saw it in january, february, and then they were able to step in and self-stabilize. when i listed my six concerns about the market, european banks were there. >> european banks, you would add that to the list of worries that i outlined before? >> i would. >> given all these risks, and given that one of them is going to be resolved in some fashion in the next week or so, what is your general positioning here in the market? would you still go long all these bonds that seem to be really, you know, run up at this point? >> so, my concern is we're starting from artificial levels to begin with. so it's very hard to make general statements, other than you want to be incredibly agile and tactical. it's very hard to be

structurally positioned in markets where central banks have played such a role. there are certain sectors -- airlines, for example, you were talking about it before, it would be a better bet than banks. yet they're both beaten up. but banks have pretty hard slog ahead of them. so i think this is much more name specific. and keep an eye on the cash that's still on the balance sheet of companies. that's going to continue to be a big differentiating fact. the question is, how is it ultimately deployed. that's going to be a very big differentiating fact going forward. >> mohamed, great to get your perspective and analysis. we appreciate it. >> thank you. >> he specifically took down your trade, david seymour. >> he didn't take down my entire trades. >> he preferred airlines over banks because banks have a tougher slog ahead. >> again, i think banks are getting to a level for a trade. look at bank of america, $13.50. over the next several days, i

think if they're at these levels, it's worth a shot on the buy side. the bkx is at the point where it's been completely oversold. the reits, the rmz, when it takes its next leg up to 1200, that's where you let them go. >> people are not scared about barngs because of a lack of earnings power anymore. they're scared of them because of the systemic risk that they represent. i think if we look at deutsche bank, those are the questions we were asking mohamed. i think their franchise is still infact. these guys have been able to look at a lot of paper post-february lows with mild credit widening. when you look at what their business model is, it's very different. to say that these guys are going out of business, and are going to be bankrupt because of brexit, i think that's where the trade is actually getting lost. i think people are piling on these guys. i think it's not even a question of earnings power, it's solvency people are worried about. >> but it's been a slow grind,

like this death spiral for the european banks. nobody can put their finger on exactly what it is. we know that these guys didn't have the deleveraging that our banks did. so to your point, david, yeah, bank of america, citigroup, you know, leverage issues are pretty good. relative to every other bank on the planet. except for the fact that this quarter may be as good as it gets. we know going into q1 results in april, expectations were really low. >> is that your call? >> you know it's been my call. it has been a name with me, and xlf has been a name on the short side. i think q2 was as good as it gets for the banks in 2016. i think you'll see them back at their february lows back in september. department store stocks lost their gains from the past month. the names, and whether any of the traders are buying. the man who coined the term

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a tough day for retail. kohl's, nordstrom. retail sales numbers beating expectations. we dive deep into the numbers and you see the department stores specifically suffering month on month as well as year on year. >> a continuation of what we saw when they all reported that they had their own unique problems. as we see the switch to online. and so if your eve -- i have macy's, which obviously hasn't worked. i hope we get some sort of real estate catalyst there. the customers still going direct. kors numbers okay, coach okay, ralph was better. so i think you could still own those and names like tjx. >> macy's and nordstrom,

five-year lows. >> they got oversold. i own ralph. that's a restructuring story that i like. as investors flock to yield like utilities and consumer staples, is it worth the hefty price tag. i'm melissa lee and you're watching "fast money." in the meantime, here's what else is coming up on fast. >> that's basically what bank of america says fund managers see happening to stocks. and we'll tell you what has so many investors sitting on huge piles of cash. plus, we know adele. the rumors are certainly heating up. and no, it's not about who's going to win the race to the white house. it's about a possible twitter takeover. it's got the whole street buzzing. much more "fast money" right after this. e infamous traitor. e infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the...

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more breaking news on china. seema mody has more. >> that's right, a surprise move by ncsi, delaying the inclusion of chinese "a" shares. in the press release, the benchmark provider said it does not rule out the possibility offcycle announcement should further significant positive developments occur before june of 2017. of course, beijing has taken many steps to update its market structure on capital requirements, capital mobility, beneficial ownership. but as stated in the press release, the point of contention continues to be taking money out of the stock market, specifically the 20% monthly repatriation which mcsi said is a significant hurdle for investors.

melissa? >> thank you very much, seema mody. also, what seema pointed out that i thought was interesting, they're not ruling out a mid cycle announcement on china, which would eliminate the annual review notion. the next possible entrance into the indices would be next june. it could be between now and then. >> no matter what, this is going to be a gradual process. they were going to put in 5% of the investable free flow in china over the course of 18 months by passive money. i don't think this is that big of a deal in terms of the flows. in terms of china, it's a carrot. we said, hey, look, if you do well, we could do this before the next cycle. not like the msci goes into a bunker and doesn't review these things constantly. china's gotten the same rhetoric when it comes to sdr. they want to be part of the club. every time they get beaten back. they say, you've got to do x, y, and z. it's what's going on in every

single that china wants to compete on the global stage. >> when they do it, it's almost like they're backing the chinese stock market to some extent. it could allow the chinese market to actually see a different pool of liquidity -- or different pool of investment come into it. we talked about selling in different -- in other countries. to actually move money into china. i think it's confidence. it's all about confidence. that's been a casino market for such a long time. to see msci come in and back it up is a very, very strong statement. >> the pool of money could be 20 to $30 billion u.s. dollars. at this point, we're watching the after-hours session, the etf that tracks china "a" shares, down by about 2-plus percent or so. would you do anything on that? >> actually, these "a" shares, it's a much smaller sort of etf. sometimes we'll see some really big volume in the options market in this name. it's not a particularly liquid

stock. it means there are institutions that are coming in and establishing positions. i think really what you're getting at, there's very few vehicles to express views in "a" shares. that's really as investors in the biggest marketplace in the world and here in the u.s., that's what you want to do. the s&p, it gets a little boring, right? it's the same thing. but what i'm saying is, sometimes when you're looking for beta, it can happen there. with china, the shanghai is 45% off the 52-week highs. but it hasn't moved. so it's not actually a great time to start whipping around chinese stocks, in my opinion. >> news on china keeps coming, chinese stocks getting rejected again. the news of the hour, we're sitting down with a man who made that decision in an exclusive interview right here on "fast money." twitter shares rising for the second straight day. is twitter takeover right around the corner? the trade that had the street buzzing today, when "fast money"

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stocks falling again posting the longest losing streak since february. the s&p closing down by a quarter of a percent. the dow was down 132 points at its low. twitter shares surging again on rumors that it could be the next tech takeover target. you won't believe how high some traders see the stock going. thes news of the hour. msci rejecting china for the second straight year. we're sitting down with the man behind that decision a little bit later on in the show. we start off with treasuries. the german ten-year yeemd dipping into negative territory. as the hunt for yield continues. many investors are plowing into high-paying dividend stocks. but they're doing so at a cost. dominic chu is in the newsroom breaking it all down. dom? >> mow lisa, investors are starting for yield. it's easy to understand why. interest rates around the world are dropping. in some cases, bonds have gotten so expensive, that you now get a negative yield for just buying

them. so you can see the ripple effects elsewhere in the market as well in stocks. the stocks that have some of the heftiest dividend payments are among the most popular investments now. utility stocks have the richest dividend yield in the market. the sector currently yields around 3.4%. but it also trades at around 22 times earnings, which is the richest valuation over the course of the past decade plus for the sector in the s&p. same kind of story for consumer staples stocks. companies that make everything from food to toilet paper to cleaning supplies, a sector that currently has a yield of around 2.6%. but it's trading at 20 times earnings which is slightly cheaper than it was about a month ago. but still, near decade-plus highs in terms of valuation. investors have gotten so hungry for dividend and interest payments here, that they've pushed valuations to relatively expensive levels overall. now, melissa, of course, a big question is, whether this kind

of demand is sustainable longer term and of course, a lot of that will have to do with the interest rate picture. not just here, but abroad as well. back over to you guys, melissa. >> thanks so much, dom chu. we've been taking a look at these stocks for a very long time. some would make the case they're bubbleicious because people are forced to go into them. >> look at johnson & johnson, one of the best performing stocks in the entire market. trades 18 times. it will have 17% eps growth. but a lot of that eps growth is manufactured. i think it's a situation that's setting up, when you have a cyclical move back into the stuff that should work when the economy is humming -- >> are you saying that's so far away, the other side of your argument is, we're never going to see that. the world is so broken -- >> we've seen this over the last couple of years. look how volatile the utility stocks have been over the last year and a half, as we've seen

the dollar go back and forth. since we had the temper tantrum. there's risk to these things. there's risk to the underlying. go have a ball, buy johnson & johnson. all-time highs. >> kimberly clark is continuing to grow their sales numbers 5% to 8%, and doing it in emerging markets. the weaker dollar will help them. the dividend yield there is something that is an added benefit that should be trading at a premium. why shouldn't it. >> i think, though, it gives the perception of there being less risk than there is. investors are hungry for yield. we saw that go back two or three years ago. look at the mlp space, right? what could go wrong? great yields. well covered. lots of money flowing in. the story kas in a virtuous cycle. i think we could see the reverse here. there's the perception among investors -- >> look what happened to the utilities. >> what if there's a no vote with brexit, what happens to the yield instruments. they come off. >> do you think there's a lot of

money that would be gained because of brexit? >> absolutely. no question about it. >> i don't think u.s. consumer staples. kimberly clark hasn't broken sales in more than four years. >> they're growing in certain parts of the world. there's a significant upside to that growth. i think you've actually got -- you do have a safety bid to these things. there's a whole new group of investors playing there. maybe suddenly, although no one on this desk thinks this is suddenly going to change. we've been in a paradigm shift. our yields are going to be staying uber low. you can't tell me there's not a whole new class of investors to make them more defensive. >> if you're on the hunt for yields, what are some high dividend paying stocks worth your cash. coining the phrase stocks are the new bonds, joining us from the morning star investment conference. steven, welcome to the show.

>> thank you for having me. >> we've been having a heated debate about valuation, specifically when it comes to the dividend paying stocks, the likes of the utilities, or tell com, or consumer staples. how do you wrap your head around the valuations right now versus where they are historically? are you in the camp that believes there is some sort of a structural change, because yields are so low, that these stocks will find a bid and remain finding a bid for quite some time? >> well, the way we look at consumer product companies right now is they have much stable -- a very stable margin. and so when we look at the market as a whole, it has very high margins, and as the margins come in for the overall market, we believe the consumer staples won't look so expensive relative to their counterparts. even though the consumer staples aren't cheap by any stretch, they are a much better deal when you consider what's going to happen to margins of other companies as they come in.

in addition, i would point out, if you look at, for instance, a stock like coke, go back to 1998, it was trading at a significant premium to where it is today. albeit, its growth prospects have slowed significantly since then. the valuations are nowhere as extreme as they were in the late '90s. >> some might argue these trades might look like crowded trades. there's a certain number of investors that will lead to these trades because they're searching specifically -- let's say there's an environment where the interest rates go higher. is that something you stay up at night worrying about? could that be the catalyst for the big exit out? >> i'm actually worried more at this time of people, is the market coming in. these companies provide a safety in a down type market environment as they are consumer staples. people know what they're getting. their products and margins are stable and you don't have to worry about them at night.

i'm worried less about upside right now than protecting my downside. >> it's karen. i hear what you're saying about the margins. that's from the fundamental side. it looks like that is a -- an excellent thing to have in a business, right, good margins. but what about the multiples? i know coke, you took that one out. but other multiples look very rich compared to the growth. >> yes, again, i think it's symptomatic of the entire market. the market is high. what's happening is the margins that are overstated for the rest of the companies are masking the fact that the entire market is at a very high level right now. so these companies on a relative basis are actually a fair deal. in fact, these kind of staple businesses, even though you have slow growth, people pay for something that's stable and steady. they don't want the volatility. >> right. >> so i'd pay a premium for them. >> all right. we've been focusing our -- yeah, go ahead, stephen.

>> i was saying, you know, there's other areas of the market to search for yield. there's other businesses you can find. i was looking at it earlier today again, a big position that we have in a company called samsung electronics over in korea. they've said they're going to distribute 30% to 50% of their cash, assuming half of that comes back in the form of a dividend yield. you can get a 3.5% dividend looking abroad on a company that's priced at multiples around two times. you don't actually have to -- if you want to be more aggressive and find something that has yield, those opportunities are still there for people who are picking stocks. >> all right. stephen, great to speak with you. thanks for your time. >> thank you. >> it's a little bit loud in the background there at the conference. >> look to korea. a company like cisco, has a lot of cyclical elements. samsung twads well below market multiples. i would much rather do that than

coke. to me, trading at 22 times. doesn't make any sense. if you want yield, want defensive, a little -- >> we're talking to our consumer staples analyst. he's having conversations with the investors. they ask about valuation, where they stand, having us break it down for them. the fundamental investor is not running out to buy these stocks. the fact is, there's a lot of them out there taking these things up. the new sort of like momentum, if you will. >> the structural things in the market, the forces, one force is the rise of these low volatility funds. so there's -- you just want to go in and say i want a low volatility fund. you're putting money in the sector and not necessarily thinking where you're putting your money. that's providing a bid. >> i think part of the disconnect i have, i guess you talked about relative value. >> right. >> so i think maybe they have to

be invested, right? they must be invested so they look for the best relative value. but i don't think your average investor needs to necessarily be invested. you know? there's something about cash that -- >> paying down debt, or whatever the options are in the world. >> i do think -- you think you're in a low volatility fund. >> up next, is twitter the next takeover target? that's what one group of traders are saying. we'll give you all the details right after this break. how's the new project going?

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dan, take us through the action. >> yesterday, obviously, that was the first, you know, people -- first day that people wanted to extrapolate after the linkedin deal. the follow-through today was pretty impressive. traders kind of getting in on possibly a short squeeds. today, call volume was two times that of the average daily volume. two times that of puts. a lot of the call volume was in june and july, near the money calls. it doesn't show a whole heck of a lot of commitment. there was about 2,500, the january 201720 calls that traded

for about $1.25. they break even at 2125 on january expiration. up a whopping 40% or so. if you're buying those calls, you believe there's potential for big corporate action, or takeover. here's the chart. we obviously know there's nothing else to describe this as a slow moving train wreck over the last two and a half years since it went public here. obviously short interest is high. sentiment is very low. i suspect you've got to come at some point after jack dorsey's one-year anniversary, i don't think that board's going to agree to sell before that. >> where do you stand on the possibility of a twitter takeout? >> i said it before, i don't think it's possible. facebook, no reason for it. >> not possible? not going to happen? >> why would google buy them? they need to reconstruct the entire process. i think management has let this company die. it will take a miracle basically to get it going. great brand. but it's not something you'll see google come in. the shareholders would be upset. facebook, same drill.

i don't know why a media company might step in to buy it except for brand recognition. the valuations here may suggest a media company could step in. but why? what makes sense about -- >> the news. that's what media companies need to do. >> bringing it all together? maybe. it's a possibility. >> people can agree on one thing with twitter, it's a media company. the value is something a media company with probably extract better than they can. >> check out the full show of "options action" on friday. the news of the hour. msci rejecting china from the global indices.

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msci denying china stocks from entering the global indices. what it may mean for the global markets. >> i'm a bit surprised. i just got off the phone with an etf manager. he's a little surprised. i think the idea was, this was a gradual approach. they were only going to add 1.1% of the actual market cap of the emerging market index from china to the index. a fraction of what the actual market capitalization really was. this is a great idea because

they will have leverage over chinese authorities. now they don't have that. i think there will be blowback from china. i'm concerned about that. i think the chinese authorities have made it clear, this is an important priority for them. they want to be part of the global markets. >> they already are. >> what i don't understand is -- >> not the "a" shares. >> chinese companies are now 26.6% of the msci em. you need to get china right to even invest in the em. that's the probably with the edm. you lose money investing in that -- >> you think the em should be broadened out. the fund managers in the u.s. probably pushed back and said, we don't have any china "a" shares out there. black rock filed for one a couple of days ago. they may want more time to get the thing together. >> in order to actually -- >> i think so. >> stick around, bob, for more on this.

sebastien, thanks so much for joining us. >> thank you for having me. >> bob was making the good point that this was something that china very much wants to have happen. what is the number one thing that needs to happen that could mean inclusion for chinese "a" shares, either at next year's annual review or before then? >> so, we've -- we have communicated for issues that needed to be resolved to allow the inclusion of china "a" shares into the emerging market index. out of these four issues, one has been completely resolved. issues around the den fishl ownership of shares. two has been resolved in theory. great enhancements have been brought by the chinese authorities. however, these enhancements need to be tested. that's specifically on the question of quota allocation, capital mobility as well as handling of suspensions of trading of "a" shares.

and one issue remains completely unaddressed around preapproval requirements imposed by stock exchanges shang hi high on financial projects. when they're either tested or resolved, the inclusion of the shares into the emerging market index will be absolutely possible. >> did you include, sebastien, does it include the phrase that there could be inclusion prior to the next review, seeing that one issue isn't completely resolved, two partially and one not addressed yet? it sounds like you think maybe they're on the road to doing this sooner than a year from now? >> so, i think we cannot assume what is going to be implemented. if we look at what has happened over the past month, there has been a great pickup in changes implemented by the chinese authorities. if we count on the continued momentum in terms of changes,

the issues could be resolved relatively quickly. and if they are, to the satisfaction of international market participants, then nothing will hold back the inclusion of the "a" shares into the emerging market index. >> sebastien, it's bob pisani. can you address the issue of where the chinese authorities might respond in what has happened here today? i think they'll be rather surprised by that. and secondly, can you tell us a little bit more about what you'll do to act as a force to improve transparency? a lot of people felt you had leverage with the chinese authorities by letting them in, because you could act as a force for more transparency? now you don't have as much leverage at this point. how do you feel about that? >> so, bob, on your first question with respect to the reaction of the chinese authorities, obviously we cannot make any assumption on their reaction. however, we have no reason to believe that there may be some negative reactions from the chinese authorities. we have worked closely with the chinese authorities so far, by

providing them feedback from international investors, for them to have more information to address the remaining issues. so we don't see why this should be changing. in terms of our leverage, i think we don't put leverage at the forefront, right? we act in the interest of our clients, which are among the largest money managers around the world. we look at the accessibility of the market. we look at the investability of our index. these are really the criteria that drive our decision. >> all right. sebastien, thank you so much for joining us. we appreciate it. shall so what's our take at this point? they could be on the road here. >> i thought there was a lot of really good points. there's a lot of funny business going on. i think bob's point is a good one, they need to get this transparency, some of these functions in order the way we do it in the west if they're going to be incorporated in there. >> there's no mystery to it either. i think what sebastien is very clear. >> there are four things.

>> remember, msci acts for a group of institutional investors. that's it. if they're not acting for the chinese government, who cares. if they want to play with all the big institutions who need corporate governance, they're going to play ball. >> bob, it's a pleasure to have you here on the set. >> it's a pleasure to be here. >> where china stands in the eyes of the msci, can they create the etf -- >> a year from now you'll see a number of them -- black rock just filed for china "a" shares. >> bob, thank you. up next, the "final trade." i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series.

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the "final trade." we got to wish b.k. a happy birthday. happy birthday b.k.! time for the final trade. tim? >> he needs to shave that chest, too. i tell you what, i think china mobile is the place you get the dividend yield. that's also a chinese consumption play. now is their time. >> ads, all about gross margins. >> we're talking about the retailers where there's the treasure hunt aspect. tjx. valuation has gotten attractive here, dsw. >> we usually rally out of fed meetings, xlf, u.s. banks.

i think they're a sell. but get a bounce. thanks so much for watching. "mad money" with jim cramer starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. mad money starts now about. >> hey, i'm kramer, welcome to mad money many welcome to cramerica. it's my job to teach and coach you, not just entertain. call me or tweet me at jim cram cramer. we're in a bad moment, nobody denies that. we have all sorts of