cheap, it was like, by the way, i hate to say it, i'm going to tell all those young people out there, you've got to be crazy not to lease a car or buy a home right now. you'll regret it a few years from now. >> thank you both for joining us this hour. that does it for "closing bell." "fast money" begins now. "fast money" starts right now. we're all over the two biggest stories impacting your money out of d.c. and london where the fed's two-day testimony in the possible brexit has the traders listening. wi wilfred is on the ground in london. we start with steve liesman. they seemingly looked over comments from the fed's monetary policy report that could have big implications for this market. >> markets were mostly focused on what the fed chair said in the q&a session at the senate banking committee. the fed also submitted its

monetary policy to congress today, as part of the testimony. it had this worrisome nugget about stock values. quote, forward price to earnings ratios for equities have increased to a level well above their median over the past three decades. although equity valuations do not appear to be rich. term premiums are more normal levels. that is what they said. yellen was asked about the possibility of asset bubbles. she was a bit more sanguine. she did not contradict the report. >> i don't see signs of extreme threats to financial stability be at this time. this is something we monitor very closely. but it is something that can happen in a low interest rate environment. so i don't think that i see any broad-based evidence of those financial stability concerns,

but it is something that's possible. >> now, the fed noted in the monetary policy report why the interest rates would rise. a rise in rates that's not connected to good economic news, concerned about inflation or other reason why yields would rise. >> i think the language was very important. equity valuations are not rich relative to where treasury yields are right now. which would imply, you know what, yeah, there's going to be an inflation of certain asset classes because of what else is going on in the financial markets. >> i think that's right. if the fed was serious about raising rates, that might work into yellen's testimony. what they would want to do is to really prepare the market. it doesn't want to shock as a result of a rate rise. it did some of that with the temper tantrum back several years ago, and ahead of the first increase, where the fed wants things to cool off a little bit, so that when they do raise rates, the markets are more prepared for it. >> steve, thank you. steve liesman from headquarters.

so you agree with yellen? are stocks rich? fairly valued, i should say, i don't want to say rich. >> stocks relative to themselves, they're trading very expensive. we can make the same statement for banks. i don't think janet yellen was saying stocks look expensive. in fact, you're right, the qualification relative to where interest rates are is exactly what we've been saying. equities deserve to be trading at a premium. some are mechanical in terms of doing valuation on the company, including the risk-free rate. some are obviously what you can get in any other investment. what i would say, and what we've always seen, is companies that deserve a premium are certainly places where you're seeing some growth or places that are uber defensive. utilities and some of these high-dividend stocks are the most at risk. >> do you value a company to come up with a valuation

relative to treshy yields? >> when you do a discount cash flow valuation, much of the fundamental -- or the current value comes from discounting rate. when you put in the higher interest rate, the number gets smaller. but around a quarter of a point, half a point, it doesn't really make any difference to me. i don't really get all of the -- you know, i don't understand why a quarter point is that big of a deal. i accept some people think it is, so it is. but for me, i don't look at the market as a whole and say it's really expensive, oh, it's really cheap. i just like to find individual names that are attractive. >> i just don't know where to start with all this. >> oh, boy. >> is the market expensive. one metric i use as a macro investor is total market cap to u.s. gdp. that's running about 120%. there are two other times in history that we have been that expensive. 1999, and 2008.

so relative to itself, relative to the past, the stock market is expensive relative to gdp. as for rates, i mean, first of all, the fed is manipulating rates at these levels. we've all talked about it on this desk. rates and bonds are the biggest bubble out there. it is the black swan. everybody's looking for other black swans, it's the bond market. rates rise, it's going to be a problem. to karen's question about a quarter point, is it going to matter. it's all about the dollar. a quarter point could create a massive short squeeze in the dollar. >> but yet, first of all, is the dollar going higher? >> yes. >> that's going to be something that -- is that your whole theory? >> the dollar's going higher. >> but there's no way to raise rates. the dollar went up immediately. ultimately traded lower. >> the last couple months. >> traded lower. so everyone thought utilities, staples, last time they raised rates, everyone thought that was the -- >> we had a massive 14-month rally going into that. it was almost the sell the news

type of thing. >> in a historical context, it makes no sense here. we're in a place here where -- >> 1999. 2008. >> are we measuring the s&p or -- >> the russell, total u.s. total market cap gdp. it's good enough for warren buffett. >> the u.s. market cap and gdp i think have changed structurally over the last several years. >> but ultimately we get to a place where would stocks be trading if the -- >> absolutely not. >> this is companies that to me, we talked about this coming into the show, that the earnings quality, at least the earnings growth over the last seven or eight quarters sets the table. >> here's what came out of yellen today. she didn't seem to be pushing the dovish case anymore. she said, we're pretty much in line with where the markets stand on rate hikes here.

we're not going to pull forward or anything like that. isn't that a comfort for valuations here. if you're worried about valuation, you have janet yellen saying, you know what, we're here with rates and we're good. >> i felt like she was, as i said on the "closing bell," i felt like she was beaten today, i felt like she was exhausted. it should simmer the markets down. but for tim, i don't understand what happens with -- let's just to push back. it's staples, it's gold, and it's utilities. i don't think anything's going to change. i don't think they're going to sell off. i think we could talk about multiple expansion but there's still no competition for you. >> i can agree with that in that i think even before brexit was a front-page article every day, and something we were consumed with on this show, we were still talking about those trades. and i think those trades are exactly what we're talking about with the fed story. if we get a no-exit and remain,

this is a story where a lot of these things of fall off the table. >> the other story is the brexit. will they or won't they. wilfred? >> reporter: hey, melissa. thanks very much. there's one poll out today that did show a slight offset to that remain momentum that we'd seen over the weekend. but despite that offset, if we look at the betting market odds, it still implies a 78% chance of remain. very strong chance of remaining, according to the betting markets. i want to bring you a different opinion, though. citigroup note from their chief political strategist came out in the last hour or so. i think this is what citi has to say. based upon our assessment of the polls which currently show statistical tie amidst a slight shift back to remain, the scenario continues to close to remain, a vote to remain below 55%. we still assess the probability of a brexit at 40%.

clearly, a lot higher than what the better markets are saying. a lot higher than what the sterling markets have done in recent days as well. so things perhaps not so definite. and i'd say that's the sense on the ground. it's one of uncertainty, whether i'm talking to people on the street, to pollsters to politicians. one was asked whether he agreed that there had been a shift to remain. >> there's been a swing towards remain. >> not from the polls i saw this morning. they're all over the place. really, all over the place. the telegraph saying less likely to vote. the "times" had leaving. i don't know where we are. i don't think anyone knows where we are. all i can say is, i think it's very, very close. >> reporter: the leader of the uk independence party. he is favoring exit. so we've got one more day of campaigning.

i can't quite believe it, until the biggest vote in british politics for a generation. certainly in my lifetime. and it's very, very close. >> yeah, it does seem close, according to any poll you look at, wilfred. if you still get a remain vote, does that end necessarily the potential political uncertainty in the future in britain? does that sort of give courage to the people who want to leave still in terms of carrying that mantle forward, and also empower the periphery of europe to say, you know what, we want referendum too? >> reporter: yeah, i think that's two questions to break down there, melissa. one is the rest of europe and the other is the uk. the referendum is only going to happen once. certainly once in the next decade or so. so i think it would put to bed the issue of whether britain will leave anytime soon. but a small victory for remain only would see pressure still on david cameron. a vote between 50 and 55, you

still see a lot of pressure on david cameron. he's not popular at the moment so you could still see political shuffling in the british political scene, but not likely for a brexit. now, the rest of -- >> i'm sorry to interrupted you. we have breaking news. thank you for joining us from london. phil? >> we have news from tesla. it has made an offer to acquire solar city, the company making this announcement on its blog a few minutes allege. what is unclear from looking at the information, the little information we have so far is the price that they are offering to acquire solar city. this is not a huge surprise given the relationship elon musk has with solar city. they started tesla energy sort of as a subsidiary back in last year, in 2015, march of 2015. they've got the giga factory. now they believe solar city would complement that business. so again, solar city, an offer

coming from tesla, we're still trying to figure out exactly what the price will be. as soon as we have that, melissa, we will pass it along to you. >> phil, there are obviously a lot of ties between the two companies. what is exactly the interrelationship between elon musk, didn't he -- i hope you can refresh my memory. >> melissa, i lost the feed, i do not have you. we'll let you go. chase the story. again, this news just crossing on the tesla blog, making an offer for solar city. we don't have much details in the way of price. >> we do. a headline, talking about a -- this might be -- bloomberg headline, 1.22, from 2650 to 2850. >> okay. >> it's surprising to me. even given their interrelationship to their history. i don't know why, if they do a

stock for stock deal, there's more debt. obviously they're acquiring assets as well. it seems like a bit of a -- >> the charging station thing, is this something to add some sort of -- obviously it's the in ub one shareholder in both names. there's got to be something financially on the table. >> possibly the battery factory. but given that solar city, it is one of the leading residential solar providers in the stusmt -- >> to me, what it says is elon musk doesn't view tesla as an auto company. that's how i view tesla, not necessarily as an auto company. look what he's doing with the giga factory, with this acquisition, he's clearly going after the decarbonization of the electric grid. if you want to buy either of these at the valuations, particularly tesla, that's the only way you can actually make the numbers work in a sense, if you really do believe elon musk

can be the king of decarbonization in the grid in the u.s. >> the balance sheets of both companies, we all know elon musk has actually been -- i don't know how levered he is. he's been borrowing against his stock. i start to worry about really, you know, what this all means in terms of how levered up either he is or the balance sheets of both. again, it's an offer and there has to be a vote here. this is where you really get into dangerous territory. >> phil, i think we've got phil lebeau back. >> you know what i find interesting, i'm listening to you guys' conversation here, they're strictly talking about how they would combine solar city in with the existing tesla and tesla energy business. i know that there are going to be critics and cynics out there who will scoff and say, what is elon musk thinking. but they're saying we would be able to better expand our addressable market than either

company could do separately. those interested in buying tesla vehicles or power walls are interested in going solar, and the reverse is true as well. so clearly getting to the point that was made there about whether or not tesla is simply an automobile company, or broader company in energy company, utility type company, that's clearly where they're aiming with this combination here. >> okay. basically providing a source of sustainable energy to consumers. it seems like they're taking on a much broader mantle at this point by doing this sort of deal. >> absolutely. >> how does that cloud how investors take a look at this company? because an investor in tesla doesn't necessarily want to invest in sustainable energy in the future. they might want to invest in an auto company that has a battery factory. >> a great point. then again, look at the people the way people valued this as an auto stock. i'll be curious if they look at it now, and say, wait a minute,

am i buying a utility company or auto company? >> the same percentage of each, so he's on sort of both sides of the table. it will be interesting to see what the independent board of solar city does here. this isn't a gigantic price for a company that was trading significantly higher, not that long ago. so i don't know if this is a -- just a proposal, it seems like he could force a deal if he wanted to. >> it seems like a distracting thing to do, though, phil, when this company is struggling with the mass market car, the core business, with deliveries. they just had a capital raise. they probably need more capital. why now? i know you don't have these answers, but this to me as someone who's always questioned whether tesla's valuation was close to being justified, and people focused on deliveries, who cares really? this deal makes no sense. >> and i think a lot of people are going to say, what does this mean about the giga factory? does this mean that what they

sense as the demand coming out of the giga factory is going to be even greater than what they've already forecast? do they look at the giga factory as being a core element of what would also be combined with solar city? i think that's one of the questions that's really going to be addressed when we hear from elon musk a little bit later on. >> yeah. phil, thanks so much. interesting also to see how the rest of the solar space reacts. what does it say about the solar sector. so how would the others trade. meantime, we'll have much more coverage on this as the developments warrant. meantime, coming up, moody saying a donald trump presidency could cause a recession. a massive trade with the emerging markets raise a lot of eyebrows today. we'll tell you what's got traders so intrigued.

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shoshow me more like this.e. show me "previously watched." what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. kb home shares getting 3% after hours. the second quarter results beat on the top and bottom lines as

first-time buyers pushed deliveries higher. kb's results came amid housing market data showing a solid spring season. backlogs for the company, the own housing starts, rose 10% during the quarter from a year earlier. deliveries climbing 30%. about twice the rate analysts anticipated while new orders rose 8%. the stock is up more than 20% year-to-date, melissa. >> thank you, seema mody. grasso wasn't just kb homes. >> you always look at household formation. if you see the first-time home buyer is doing better, or see some sort of a bullish sense to that, i guess the housing market that's been under such pressure, but given all that positive, kb homes is up 17% going into this premium, i believe. depressed valuation, i think that the risk is too the upside in the housing sector. >> look how len nard traded

today. it absolutely reversed midday and cleared near the lows of the day. from a pure trading perspective, i would be careful trading into kb homes tomorrow. >> you know, kb is executing on their business, too. the margins were better. i'm quickly looking at these numbers. this is the kind of a thing where a lot of the housing sector, steve is talking about household formation is a tailwind that right now really should be supporting this sector in a much better way. these are good numbers. it sounds like people are neutral on the desk though. i would fall in the same camp. >> still ahead, the news of the hour. tesla buying solar city. tesla will be holding a news conference later this hour. we'll bring you the very latest. i'm melissa lee, you're watching "fast money" on cnbc. here's what else is coming up on fast. >> oh, my god. becky, look. >> the size of that massive trade on the emerging markets.

we'll tell you what had traders betting millions that the em is going to surge. plus, citizens of the u.s., this man could be your next president. >> the belt moves this way. it moves this way. it moves that way. >> and it's got moody's saying it could cause a prolonged recession. the man behind the call will reveal why when "fast money" returns. thank you.

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we've got more news on the deal announced in the past 25 minutes or so. tesla to buy solar city.

phil? >> melissa, pardon me having the phone up to my ear, i've got it on mute so they don't hear me. i'm listening to elon musk right now, giving a few details about this. i also want to give you commentary or response from the folks at solar city in response to tesla planning to make an offer. solar city said it intends to carefully evaluate tesla's proposal. and by the way to the people who are saying, wait a second, isn't the ceo of solar city elon musk's cousin? yes, it is. he said he will recuse himself from the decision-making process when it comes to this offer. one quick update regarding the conference call that just started. elon musk said that they look at this as an opportunity, if they are combined with solar city, or combine solar city into tesla, to be basically one stock shopping when it comes to energy, storage, the power wall and the giga factory, to transportation with tesla. that's an early indication of

what tesla is thinking. elon is still talking. he's not taken questions yet. we'll hop back on and as soon as we get anything else, we'll get back to you. >> obviously tesla has a ton on its plate. solar city is a cash flow negative company right now, with debt. strategically, why now? why right this minute they need to do this? >> all i know from this call so far, elon said they've been looking at solar city for a number of years and that they're ready to make the move now. that question you can bet will be asked by me or other reporters in just a few minutes. we'll see what elon musk has to say about that. >> i'm sure elon musk has been looking for years. he owns the stock. he owns a lot of the stock in solar city. phil, jump back on. update us as you have developments. the big news here, the deal tesla for solar city.

grasso, you were mentioning key levels here for tesla, now down by about ten bucks. >> you look at the 200. if there's 205, you look at # 00. 190, below that, 171 is another retracement. you can't judge this in the after-hours trading. it looks like it will bob and weave between 190 and 205. >> i meant 10%, $20 is the decline there. it's interesting to see some of the impacts that we're seeing in the after-hours session as far as the other solar names trading higher on the back of this news. not that they have a cousin that has another company that can buy them. first solar up by 7% right now. >> it's rallying on stuff that's probably not going to affect them. now you get the opportunity to in a depressed space where

you've seen it. karen's point is spot-on. this is a guy that's a genius, way ahead of his time. he's had solar city sitting in front of him forever. >> you talk about the addressable market for both of these companies. the question is, which is the bigger mass market? is it for the car, or the storage, or residential? it gets back to a place where you can just never justify where tesla's been trading. this is, to me, again, look at what's the premium this should trade over the residential solar delivery. the giga factory seems to have the most value. because to me it's the business that on its own is compact and transportable and something that has a value that we can see here and now. and that's, to me, where i think most of the value of tesla is right now, quite frankly. it comes at a time when this company has such a big agenda, it makes me wonder on the timing. steve, everything you said is right. don't count elon musk out of anything. he's one of the greatest guys in terms of scientists and innovators in our country's

history, but knowing the cross-ownership of these two companies, it makes me concerned. why now. >> quite frankly, when you -- >> you're more negative on the deal? >> i think tim started out saying it seems a little weird. we don't know how much leverage there is. it seems he's trying to struggle to get a little more finances. that's what makes me worried. i'm worried he's never going to meet those deliveries. he couldn't meet it with one, two, and can't meet it with three. >> the conference call is under way. elon musk is addressing analysts as well as the media. the stock is close to the after-hours session lows. we'll keep monitoring this story. still ahead, moody's coming out with a shocking report saying donald trump, a presidency by donald trump would trigger a recession here in the u.s. what has him so worried, right after the break. tim cook breaking away from apple's playbook.

that analyst will be here. much more "fast money" straight ahead. ♪ you're not gonna watch it! ♪

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sgrrks the news of the hour here. tesla holding a news conference as we speak. we'll bring you the latest details as we have them. here's what else is coming up in the second half. show. tim cook versus donald trump. the apple ceo taking a very public stance. what it could mean for the stock. we'll take you behind the multi-million-dollar bet that the surging markets could surge between now and september. first we start off with the election. war of words over the economy heating up. hillary clinton going after donald trump on what she calls his boosting growth. john harwood's got the details from d.c. john? >> this was hillary clinton's attempt at a comprehensive takedown of donald trump on the economy, just like she attempted

to do on national security a couple of weeks ago. she said donald trump's policies would benefit the rich, through tax cuts at the expense of average people. she said his talk about seeking a discount on u.s. debt could cause a global financial panic, and said overall his policies would throw the united states economy into reverse. >> one of john mccain's former economic advisers actually calculated what would happen to our country if trump gets his way. he described the results of a trump recession. we would lose 3.5 million jobs, incomes would stagnate, debt would explode, and stock prices would plummet. >> there's a more immediate economic issue donald trump needs to deal with, and that's the shortage of cash in his campaign. the federal election commission report that just came out, hillary clinton's got $42 million in cash at the beginning of june.

donald trump had only $1.3 million. another sign of the idiosyncratic campaign that he's run. he's trying to ramp up quickly with fund-raising. we'll see how successful he can be. he'll fire back at hillary clinton tomorrow on the clinton scandals and try to make headway there, guys. >> john, thank you. john harwood in d.c. that former mccain adviser hillary clinton mentioned joins us tonight on the fast line. the man behind the trump recession report. mark, good to have you with us. >> thanks. good to be with you. >> it's interesting reading through this report, you make the case, the caveat that there are not a lot of details out there. take mr. trump at face value, this is what stood out to me. in three years, by 2018, two years, the s&p 500 would be about 1472. like 600 points lower from where we are right now, the ten-year treasury yield would be at 8.6%. walk us through what got you to that forecast.

>> well, a number of things. most importantly is the massive tax cuts that he's proposing. by the way, the scenario you've referred to takes his proposals completely at face value. and in those proposals, thenone it is very -- a small part of it is paid for. you get very large budget deficits, and much higher government debt. and that on top of an economy that already is full of unemployment results in much higher interest rates, which combined with a number of other things undermines corporate earnings and ultimately stock prices. the confluence of different factors coming together. but the key thing is the very large budget deficits that ensue under his plan. >> so in terms of the headline, it's a good one, that there could be a recession under a trump presidency. what are the odds according to the modeling that you have done?

and i understand that there's a range. you ran the model for trump light all the way through, trump at face value. what's the probability in your view? >> well, you know, my sense is that if mr. trump became president, i don't think the congress, no matter how -- what it looks like, would actually pass what he has proposed. because it's pretty clear that everyone would end up in a pretty bad place. i think if you did some, you know, reasonable assumptions, and we've run some other scenarios that we think are more likely to occur, giving what congress puts on him, you would end up with an economy that is smaller in the future, because of the policies that he puts in place, including immigration and trade policies on top of the fiscal policies. but it would be okay. it's not an economy that would

fall apart. the most likely scenario is probably a scenario that is a recessionary scenario. >> mark, thank you. mark zandi. a similar report on hillary clinton's policy will be forthcoming. so they will sort of model out both candidates. both sides of the aisle here. >> mark is a smart guy. taking him at face value, what else can we do. are we supposed to vote for somebody who's throwing out policies? we think he's going to change, come to the middle, whatever. the reality is, it's been unpredictable, uninformed -- >> do you say that about both candidates? i know we're not supposed to be a political show, but you could say the same thing about both candidates. bernie sanders moved her so far to the left, that we have to take her at face value -- >> wait a minute. wait to see what she has to say. >> this is a case where at least i have a track record, i have a pretty good idea of what the

policies are going to. >> ballooning debt. >> i'm not p -- we're talking about a guy who's articulated policy that's all over the map. and policy that does not work. >> one last thing. it's very inflammatory. mark left off saying trump will never be able to get his policies through congress. most likely the republicans will lose the senate. and they'll still own the house. and hillary won't be able to get hers through. >> do you vote for him knowing his policies don't go through? >> i hold my nose and i vote for trump. i am a conservative. i hold my nose. i can't vote for her. i already know what i've got with her. >> you would rather vote for what you really don't know about as opposed to what you do? the devil you know -- >> the worse evil than an unknown. but i'm in new york. it's probably a wasted vote anyway. >> that's also the wrong approach, too. >> the bottom line is, you have

a vote, you should use it. >> 8.6% treasury yield in 2018 under a trump presidency. anybody? who is worried about a possibility of an 8.6% treasury yield in 2018 under a trump presidency? >> you know, if there is a massive recession, i think the 8.6%, those two things don't quite gel. >> right. >> i mean, you know, when he did talk about, you know, defaulting on the debt, he walked back from that. >> that's where you get the 8% yield. you're not going to have a recession with an 8% yield. however, if the rest of the world decides, you know what, we don't want to hold u.s. debt anymore, and they start dumping that thing, you could have very high yield and recession at the time time. >> there are a lot of people in the republican party, myself included, who doesn't like anything he has to say about the economic policy. >> all right. up next, apple's political

playbook. tim cook hosting a fund-raiser for paul ryan, while dissing donald trump. moments ago, tesla offering to buy solar city. the company is holding a conference call right now. phil lebeau, you see right there, on the call. he's about to ask questions. tesla shares hitting the 195 level in the after-hours session, down by almost 10.5%. very busy "fast money" still ahead. m only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans,

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welcome back to "fast money." the big story in the past 45 minutes, tesla making a bid for solar city. solar city is up by almost 20%. it hasn't traded at these levels since may 4th when it was as high as 27.78. tesla hit 197 even in the after-hours session, down by more than 10%. it has not traded below 200 bucks since march. the conference call is going on right now. phil lebeau is on it, he's asking a question. as soon as he has any details, we'll go right to him. meantime, apple has taken a strong stance when it comes to donald trump. it doesn't mean executives are distancing themselves from the gop entirely. josh lipton is in san francisco

with the story. >> reporter: well, melissa, apple has made the decision against donating technology to the gop's convention in cleveland next month. and that is a change for apple. the tech giant in the past has offered such aid and assistance like loaning computers, for example, to both republican and democratic conventions. but the decision isn't really too much of a surprise. there is no love lost between apple and donald trump. >> we're going to get apple to start building their damn computers in this country instead of other countries. >> reporter: but apple's decision to pull away from trump does not mean ceo tim cook wants to distance himself personally from the republican party. he will host a fund-raiser with house speaker paul ryan on june 28th. in menlo park, california. at a private breakfast, cook will help drum up cash for ryan as well as a committee to help elect other house republicans. apple does not have a corporate political action committee.

so cook is hosting this fund-raiser on his own accord i'm told. in fact, cook has donated money to both sides of the political aisle, with both republicans and democrats receiving checks from apple's ceo. now, apple doesn't have a political action committee, but google and facebook do. both of those companies donating a little more than half of their contributions to the gop over democrats. that's according to open secrets.org. what apple does seem to be doing here is put out a basic message for everyone in silicon valley, and across the country, yes, the company stands opposed to donald trump, but not to the grand old party. melissa, back to you. >> josh lipton, thank you. karen, is this a good idea? >> you know, at the end of the day i don't think it really matters. but i don't think it would not have been a story if they said, we'll give to both. technology to both, because we're american company. iconic american company. i don't know what this really -- i don't know what to think of

it. >> i think you have to give to both. that's how you are politically correct. he's got to be a lot more responsible running a company the size of apple. and what donald trump said about apple, not making the products here, that resonates with a lot of people in middle america. that's their main beef with a lot of corporations right now. and when we're on the coasts, they want to pay $1,500 for a phone? >> they want their phone made here. is it right? i believe in free markets. i'm telling you what resonates to free markets. you can kill the coal industry, is that right? >> i tell you, when we talk about apple, the biggest issue is a company that's too big. let's talk about apple as a company and what they're not doing. we're still talking about the iphone. at some point it's an industry that's starting to gidwindle. i think the free cash flow generation is here for a couple of years. but tim cook is not an

innovator. steve jobs was. and that's the problem. >> as an investor, i want the company that i buy into, whether it be apple or somebody else to be apolitical. >> is that just living in la la land? aren't all companies political in some ways? you may not hear about it, because a candidate is not -- >> i would rather hear about it. >> you just said it. >> you can be as political as you want behind the scenes. >> exactly. >> got it. >> you know, i think that could have been handled differently. they chose to take a political obstinate road. coming up, is a major move in store for major markets? one trader is betting millions it could move to the highs in the next couple of months. tesla offering to buy solar city. phil lebeau is still on the tesla conference call. phil? >> melissa, just a couple of seconds ago, elon musk was asked, are you guys an energy company, an auto company?

what is tesla now? his answer, when "fast money" returns. ♪ you're not gonna watch it! ♪ ♪ no, you're not gonna watch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it!

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phil lebeau has been on the conference call with elon musk. >> it just wrapped up. elon mosque was asked whether or not people should look at tesla as an out oh company, energy company, how does he view the company? when i asked that question, he said he viewed the company as a sustainable energy company. from generation to storage to transportation. you need all three of those, in his opinion, in order to have a successful sustainable until company. basically he's trying to build a green energy empire here, starting with tesla and expanding into the giga factory. if all works as planned, bringing in solar city. here's elon musk talking on the conference call how he sees the company structured in the future, if you will. >> the expectation is that this would be under the tesla brand. it would essentially be three categories.

cars, batteries and solar power. >> to the question karen asked ear earlier, when might we see them cash flow positive. they did not address that question specifically during the conference call. you can bet that when they have a chance to talk with analysts and people start going over this deal, that will be one of the first questions they believe, however, they can integrate the two companies. by the end of this year, if not the middle of next year. a rough time frame. obviously that depends on when shareholders vote on this proposal. but there you have it, guys. elon musk saying, look, we are a sustainable energy company and that starts with generation of solar city, moves on to the giga factory, batteries, home generation, or home power units, and then you have tesla, of course, with the transportation end of it. >> did he speak about the timing of this deal, phil, the idea of getting -- acquiring solar city right now? you may not know the answer to

this. in terms much the credit rating of these two companies, i would imagine solar city doesn't have as good of a credit rating. it might impact the ability of tesla, the sustainable energy company, to access the credit markets. >> they did talk about leveraging. they believe they can -- this will have minimal impact in terms of leveraging tesla in the acquisition of solar city, at 28.50 a share. what does that come out to? 2 1/2 to 3 $1/2 billion? >> plus debt. >> which is the key there. obviously that's going to be a key focus for people. there's no doubt, look at the reaction of the stock, guys. a lot of people are looking at this and saying, this is not what i got into when i bought the tesla shares. that's not what i thought i was getting into when i bought the tesla shares. >> phil lebeau joining us just off the tesla conference call. the stock has traded as low as i just saw, 195, down more than

11%. overall, more negative on the stock? more positive on the stock? >> i never thought that tesla was a car company. it's always this long-term type of thing. how do you trade it right now? that's the most important thing. you have time. what's going to happen is you're going to get all these people that are invested in it. thinking it was a car company. they have to get out. for whatever reason, they want to get out. that will take some time. you don't need to catch this falling. up next, "final trade." here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement.

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everybody is a star. that's because it's national selfie day. we asked our loyal fans to tweet their photos. and they did. we want to say to each and every one of them, thank you for watching. time for the "final trade." tim seymour? >> we were teasing emerging markets, ewi. >> karen? >> also on thursday, a stress test analysis. i think we'll see good news for citi. >> i think we saw itb on the pop

from kbh. >> jp penny hasn't sold appliances in 30 years. jcpenney. >> the last check on tesla shares, 195 or so in the after-hours session. see you back here tomorrow at 5:00 for more fast. 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. >> i'm kramer, welcome to mad money. welcome to cramerica. i'm trying to make you a little money. call me at # 1-800-743-cnbc or tweet me @jimcramer. should i stay or