an election coming up, this all ties into it >> steve, thank you. tomorrow, don't miss "overtime's" interview with bill nelson we're going to discuss that big lunar lander award, the future of human space flight, about all-private crew at the space station. and the financial health of some of the space startups. all right, that's going to do it for us here at "overtime." >> "fast money" begins now right now on "fast," fresh fear factors from china. in addition to the harsh rhetoric, new worries about a rising wave of covid that could infect more than 65 million in china every week a deep dive on the challenges china faces straight ahead. plus, the real estate storm. why one industry exec says we are in the middle of an office space hurricane and investors better prepare for things to get worse. and raising a glass. netflix as a stock turns 21.

and the trouble on the charts for two retail giants. i'm melissa lee, this is "fast money. on the desk tonight, karen finer man, dan nathan, guy adami, and rebecca patterson. we start off with two big risks coming out of china, first, rising trade tensions between the u.s. and beijing apple the latest company to act, inking a deal with broadcom to develop 5g chips in the u.s. this after micron was slapped with a ban in china, citing it as a security risk broadcom shares at all-time highs today. the stock rising over a percent. and then, the renewed threat of china in covid one expert estimating a new wave could result in 65 million cases a week by the end of june. nbc hasn't been able to verify that report. still, the news sent shares of vaccine makers like moderna up let's begin with that scary headline of a new covid wave in

china, bring in dr. ka vita patel, former white house health policy director during the obama administration dr. patel, great to have you with us. you can put this wave in con ticket, you know, the p variants, and whether or not -- i don't know if people in china have had covid in terms of the penetration that we've seen here in the united states, so, is there immune till of less immunity there >> yeah, melissa, a couple things to put into context any time you hear these kinds of numbers, you do have to take it seriously. and we don't know if we've kind of seen the peak of what their cases are, i know those are predictions about cases at the ends of june, but it's difficult to say but suffice to say, xbb is the circulating variant around the globe and we know it's a more easy variant to give and to get. it's more infectious, if you will and to kind of think about where china is right now, remember, because of the severe lockdowns, we have an uneven immunity pattern. so, we do see some of these reinfections, which is what we saw in the united states, people who have had one, two, three,

even yofour, five infections, bt not as many as the broader based vaccine-induced immunity they really haven't had mrna vaccines in china. they've been using older technology and because of the lockdown policies, they had a very different distribution of the types of people unfacted the things to look at, it would not be shocking to see an uptick of cases globally and in the united states. but are we seeing more hospitalizations are we seeing severe cases and what kind of people is it? older people, people who are not vaccinated and then i think the reason you're seeing not just moderna, pfizer, other stocks trading up, it's renewing calls for and updated vaccine. even the vaccine that we have in the united states isn't the most current variant protective vaccine. so, this is renewing the calls in this country to have a much more updated vaccine faster.

and a rapid dissemination fashion. >> how would you gauge, and i know it's very difficult to do, what the public health response might be in china? they've had -- they had covid zero, then they completely flip-flopped on that, and at this point, we're hearing reports of sudden shutdowns of events, concerts, conferences, movie theaters, et cetera. will that sort of containment work with this variant or do you think, let it go, let's see -- in which case, for us, and for investors, the concern would be a shutdown of ports, a shutdown of manufacturing facilities, et cetera >> the supply chain demands that we've been talking about for so long that we know that china is kind of sitting at the center of and even the drug supply chain that's still causing problems around the globe i think number one, we have to take a step and look at shutting down events certainly did not do enough in the united states. it was really kind of a three-pronged strategy we really needed to put in better surveillance. we've seen that with waste water.

the china cdc, if you will, has also drawn back on its surveillance mechanisms, much like what we're doing, melissa, in the united states, right? we're not doing as much of the monitoring, although we have some systems in place for wastewater detection, which can help see what variants are more current, what we're seeing in the united states. we don't have that necessarily in china so, we have kind of a blind spot shutting down a convert won't really do you much good if you have the virus in other pockets, which can spread easily. and we know xbb can. the second part of this is vaccination. we know that vaccination doesn't prevent transmission, but it can provide that really good layer, especially for the vulnerable. and the third prong is treatments and i think that's where -- if the united states had to do something today to heed this warning, it would be to kind of make sure all three of those arms of the public health response are ready to be activated. i would like to think they are, melissa, but i have to tell you, you walk around the united states today, feels like people have thought this is over, and i think the news coming out of

china reminds us this is not over >> all right, dr. patel, thank you so much for putting it all into perspective for us. >> thank you >> let's trade this. rebecca, how do you sort of digest this? >> well, there's two downside risks to worry about in china, if they have lockdowns, you're going to see a quick pull-back in services. we're seeing that priced into some stocks. and unemployment at 20%, government says they don't want to stimulate a lot more, so, this would come at a bad time domestically but then to the point you made during the interview, if they say, let it fly, right natural immunity, what will be will be, but how do the rest of -- how does the rest of the world respond? do we start preventing chinese from coming in other countries again? is it going to spread, how bad is that spread going to be what kind of wave could we see i doubt any of us have had a booster in several months, at least. >> yeah. >> so, there is some vulnerability globally that this

could spread and we could see a mini-wave, and to her point, are we ready i think this is a risk that we need to be thinking about pretty strongly over the next quarter, at least >> whether or not china actually decides to say, we're going to shut cities down, certain sectors of cities down, or to say, natural immunity, let's let this go, there's upside risk at this point to a disruption in the supply chain >> which is extraordinary inflationary that's something you've been talking about. yeah, it's a problem and the fxi -- we understand the health concerns and we're all sympathetic to that, that's not our mandate here the fxi is at a precarious level. the 27 1/2, 28 level has been support for quite some time. there's the chart. you can see it close below 27, things get dicey, and so many of the stocks that have ban carried up on the wave, a lot of the casino stocks, starting to take it out to the woodshed a little bit here one has to wonder, it's the inflationary aspect of this that's made a fed's job

difficult. again, if this comes to fruition that much more. >> not just inflationary, stagfl stagflationary >> i think it's also deflation their in some ways, right? if china slows down -- >> right, demand is lower. >> like we see commodities lower and that's -- that's good for the inflation fighting story but to sort of translate, if you look at some of the stocks like luxury, which i own, that had just a terrible day today, you know, on the fears that china was really growing again and that's where luxury is really making a lot of money. wynn resorts amacao-related things when you asked the question, do you let it run, that you continue to operate ports, even if some of your workers are sick you come to work sick? i don't know, is that -- as opposed to a shutdown? >> i guess they could in theory come to work sick if they are well enough to work -- >> contained bubbles

so, they had workers stay within certain zones s they were allow to leave, but that still created problem, because you had transportation of a good for assembly to the port so, you still had a huge, huge amount of damage to the supply chain even with the bubbles i'm sure i'm using the wrong word, but you know what i mean >> closed systems or whatever. >> yes, thank you. >> your point about luxury, i don't know if you saw tesla. i look at it every tick every day. almost a 4% reversal from its highs today. it was breaking out, above this kind of downtrend it's been in, and i think once those sorts of fears started kind of working their way through the market, you think to yourself, what were some of the issues about missing deliveries or slow demand in a place like china it's these sorts of things there was all this optimism about china doing this about-face on zero covid you think about the gdp print we saw, 4.5%, they were doing 6.8%, 6.9% in the leadup to 2020, to

the pandemic so, the fact that we've really never had this great contribution from the china reopening trade, and i was looking at it today, you have seen freeport? have you seen alcoa, btu these stocks look like we are about to be in a global recession right now. they're not trading particularly well crude oil can't get out of its own way in and around this kind of low 70s or so so, there's lots of things in the stork market that are not the shiniest things in the nasdaq that are actually flashing some warning signs that don't seem to be evident in the major indices here in the u.s. >> it seems like investors were not be prepared mentally, thinking about the disruptions or pricing it into valuations for a supply chain disruption again at this point. herb thought -- or inventory issues coming back again they had just gone through but what -- >> well, foot locker has the inventory covered. >> exactly >> i understand your point this was a nice bounce for

them -- >> finally but then back to school's around the corner and you have this again. these are things that have not been on our radar in so long >> because the same way people -- we talk about it here, people are tired of being bearish in the stock market. there's fatigue around this entire issue, which you can totally understand doesn't mean it's going to go away and to sort of continue the conversation, the major retailers, target and walmart, target is at a 5 1/2, 6-month low, and walmart hasn't traded particularly well since earnings release, so -- you have to start looking at these things, connecting the dots, maybe there's something more there >> we'll have more on those charts later on in the show. meantime, let's focus on what a full u.s./china decouples would mean for the trade and policy relationship between the two countries. the former national economic council deputy director is with us now with that great to have you with us. >> thank you good to be here. >> it seems like damned if you do, damned if you don't, in

terms of raising china's national security concern and trying to isolate it, you know, you can be seen as weak and allowing the security concern to be an issue. but this will be at the expense of the economy, if you do say, we are going to treat this as a real issue, and say, you know what, we're not going to -- we're going to sever those ties with china >> you're absolutely right and the u.s. right now is struggling to get that balance you know, when i was in the trump administration, our view is that we hadn't done enough as a government to deal with some of the unfair practices in c china, to deal with some of the threats that they were posing to u.s. national security, but i think in some ways, we're at risk of overcorrecting here, and this whole notion of, we need to decouple our economy from china, is something you hear folks talking about more and more on the hill, and quite frankly, you know, that's something that could be catastrophic, and just to give you a sense of this, you know, our trade last year with

china was $690 billion they were our number three trading partner. they're the number one export destination for u.s. agricultural products. 20% of our ag products that are exported go to china so, we need to be careful, and we do need to protect u.s. national security interests. we do need to be tough on unfair trade practices, but we need to be tra strategic about it and look at derisking rather than trying to completely sever ties. >> it sounds like the derisking was the word of the day at the latest g7 meeting in japan, so, they're trying to move away from decoupling and saying, let's be more fine-tuned about this but there's a difference between that and actually the united states striking new trade deals with -- with friends and i know that you've been of the view that we're not doing enough of that, and the sense i got from the u.s. trade representative is that politics is policy, and if politics right now on both sides of the aisle

is that globalization is not something voters want and trade deals are going to be hard-pressed to get through congress, can you have new trade deals even if it's in the u.s.'s interesting if national security reasons? you know, critical mineral countries, for example can we get new trade deals do you think it's politically possible >> i do. absolutely and i look back at this agreement that was called nafta that was really unpopular in the united states and we figured out a way to renegotiate it and we came up with the usmca and the point there is, we can do trade agreements, they just need to be good trade agreements and i have been frustrated with the administration, they talk about working with allies and partners and how that's a key part of their derisking strategy, but they aren't creating any economic incentives to do that and this is critical for all sorts of different supply chains if we want to move supply chains out of china, we need to be

working with partners and allies through trade agreements >> the wild card is china/taiwan, i would imagine, because that will be bipartisan. game that out. what are the chances of something happening there? >> i think it's a real threat. and i was talking this afternoon with a colleague of mine in beijing and she asked me, how come no one in the united states is taking this seriously basically, what i see happening in china is that they are really preparing, they're on a war footing. they're thinking about what that kind of invasion would look like and why isn't the u.s. taking this seriously, and i think that's a great question. you know, i think this is a realistic aim of xi jinping, something that he could look to do in the next four to five years, and we need to be acting now to be both thinking about how we can deter them militarily -- i think another part of that is trade agreements, and thinking about how we can help taiwan diversify its supply chains away from

china. right now, they're 40% dependent on china for trade, and that gives china a tool of economic coercion and so, we need to figure out, how can we help them diversify, how can we do trade agreements with them so china can't coerce them as a precursor to an invasion this is something we need to take more serious than we are. we need to not just have a military deterrent strategy, but an economic deterrent strategy and i hope that's something you see coming out of this administration and this congress >> it seems to me, clete, that one of the biggest risks is being cut off of taiwan for championships. taiwan is two to three generations ahead of the u.s. in terms of chips this all according to barclays in a note overnight. so, i mean, losing that access would just be basically cutting off at the ankles global manufacturing of advanced in

infrastructure, devices, et cetera >> i agree with you. and this is the long-term risk that we need to be thinking about. and, you know, the u.s. has tried to address this through the chips bill and things like that, and, you know, i think that will help to a limited degree, but we absolutely need to be doing more, we need to be doing more than just subsidizing. we need to look at what are the conditions to make sure we remain an innovative place to do business i would like to see more talk about having a competitive tax and regulatory environment i think that's the best way that you deal with this issue if you want to bring more manufacturing onshore, make it more cost effective to do so, and at the same time, look at all those measures that i was talking about before, about how we help taiwan deter china and stand up to either military or economic coercion. >> clete, thank you. >> thank you >> so, those are the dangers imagine, you get cut off from

minerals out of china, rare earth, cut off from advanced semiconductors, and then what happens? >> catastrophic. >> it would be >> and if you follow kyle bass, you should, he's on "squawk box," he's been talking about this for the last couple of years, he does extraordinary work and clete says we're not paying enough attention to it, you have to listen to these people. >> dan, what do you think? >> yeah, it is interesting to see that folks like him, they say it's years out, like some orlt sort of invasion, it doesn't seem like it's on the doorstep a lot of the multinationals are really moving their feet and i know we're going to talk about the apple/broadcom thing but at the end of the day, what's one of the stickiest parts of inflation that we have here in the u.s. it is wages. so, i don't know how you reshore a lot of these jobs unless it's just some entree until we get to some sort of automation where we really do have machines making

machines here, because in the near term, it's -- the thing that probably keeps rates higher, because inflation is going to be sticky >> i was just driving through phoenix recently and if you go down the main highway there, you see the new chip plants starting to be built. these things are blocks and blocks, they are enormous. it's going to take years to get them up and running, but to your point on inflation, the workers in america cost a heck of a lot more than the workers in taiwan. taiwan gives much more government subsidies to those companies than we're going to give here, even though we're giving a lot so, it is going to be more expensive. canadian prime minister trudeau just the other day, they're starting electric vehicle battery plant in ontario, vw agreement. huge subsidies, our workers cost more, environment alal protecti in canada is tougher er than in china. this is slightly higher inflation than we've dealt with. >> 2% seems like a dream at this

point? >> for some, at least. all right, coming up, we're watching toll brothers the details from the quarter next. and speaking of the home building space, lowe's jumping on a top and bottom line this week, but it wasn't all glassy paint and power tools for the retailer what the company is forecasting when "fast money" returns. ♪ ♪ every day, businesses everywhere are asking. is it possible? with comcast business...it is. is it possible to help keep our online platform safe from cyberthreats? so we can better protect our customer data? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with global secure networking from comcast business. it's not just possible. it's happening.

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welcome back to fast money earnings alert on toll brothers. reporting a beat on the top and bottom lines with earnings per share a dollar higher than estimates. kate rogers has the details. >> better than expected quarter for toll brothers. home sales revenues up 14% year on year. gross margins were 26.4%, up more than 2% from q-2 of 2022. the company's ceo douglas yearly jr. said, quote, as mortgage rates have stabilized and buyer confidence has improved, the increase in demand that began in january has continued into the start of our third quarter he said in light of this, they're raising full year guidance by nearly every metric. nearly added that supply/demand imbalance is set to continue well into the future, adding to the long-term tail winds that have supported the housing

industry he said these include favorable demographics, migration trends, and more flexibility work arran arrangements back over to you >> kate, thank you kate rogers. karen, what do you think >> there was a lot to like, actually, in that, right i mean, it showed a lot of strength, i think orders up, closings up, backlog was okay, average selling price in line. there was a lot to like. you would think, if you listen to all the other stuff happening and we'll get to lowe's and home depot and interest rates and mortgage rates being back up, i mean, we can talk about it again and again, the supply/demand dynamic is so far out of whack and these -- not just toll, but others have done a really good job of managing through this and not getting over their skis, not overbuilding, but building profitably and the margins were good there was a lot to like. >> average selling price is staying up with mortgage rates higher that's a tremendous win here >> i would, on a forward-looking

basis, wonder how long they can keep the guidance where it is, given that you are seeing housing, it has picked up recently, but now we're back above 7% for a 30-year mortgage, so, it's climbed back up, and as the consumer slows down later this year as the fed hikes speed through, i wonder if the demand is going to hold up. >> wouldn't you have thought that you would have seen that already, given how much mortgage rates have moved -- >> we have if you look at -- the housing data we got this morning, the housing data we've gotten in the last week was good but it's been incredibly volatile over the last few months, and if you go year aon year, we're down a lot the housing market has already softened the companies are adjusting as appropriate. we saw that in their report today, but i think the trend over the next 12 months is going to be for continued slowing in the housing market, just bumpy and so, the question is, can companies like toll brothers continue to navigate that. the supply, to your point, helps them >> karen mentioned lowe's, they

posted a top and bottom line beat before the bell today the stock 2% higher as investors shrugged off a cut to the full year outlook lowe's is getting hit by lumber deflation, softer demand leading to weaker same-store sales >> we talked about home depot. the quarter wasn't great, but we said, the stock should have traded a lot worse than it did and if you remember, got down to, i want to say 281, only down four bucks on the day. since then, it rallied it's a valuation thing these stocks, in terms of historically where they've been, they're cheap compared to themselves and probably trading a market multiple now the fact they've come off so much, i don't think the quarters were as disastrous as people were anticipating. lowe's has been in this range, 185 to 225 for awhile. we're going to get towards the upper end of the range, but home depot acquitted itself well last week >> in a spectrum of retailers, is home improvement more

defensive, karen, in this environment? >> than discretionary? >> than a target, than a nordstrom, any other retailer out there, i mean -- is there something to be said for people bought these homes and they've got to do something with it. >> and there's some amount of maintenance work >> fix the roof, retile, regrout, whatever it is. >> i think so. i think -- yeah, i think that -- well, their pe's reflect the expectation they will have a more steady business going forward than a retailer, which has a lower pe multiple. so, i own both lowe's and home depot. i'm comfortable owning them, but i wouldn't be surprised if they trade a little lower, a little higher if housing slows, they'll trade a little lower, but long-term -- this is the low -- pe and it's lower than the market now. >> yeah. >> i think we have to go back to what rebecca just said, the lag effect we talk about this a lot and we haven't seen it in awhile, because we haven't seen a rate hike cycle like this housing makes up 15% to 20% of

u.s. gdp we talked about 30-year fixed rate mortgages at 7% you don't want to buy a new car right now, because you don't want to finance it at that rate. think about this, yes, your wages might be higher, but we've seen a lot of white collar jobs be cult over the last few months i just feel like if there's any softness anywhere, if you start to see this dynamic, the supply/demand dynamic, just soften because of rates, i feel like there's a lot of pockets of strength right now energy was one of them last year, you know what i mean starting to kind of fall off a little bit i just feel like the foundations for the economy are not that solid, when you consider that rates are not going down any time soon, unless something really bad happens >> the thing that's holding us up now, when we talk about wages and people's ability to buy a home or buy the stuff to improve their home, 80% of the jobs in the united states are service sector jobs. and manufacturing is in a recession, we saw that in the latest pmi's business sentiment

surveys, but the service sector is still doing well. and so, as long as that one holds in and those jobs don't get lost, i think they will, i think it's coming, but we're not there yet, which is why i'm not that surprised to see the numbers from toll brothers and home depot we're still okay, because the service sector is so strong, but that's the next shoe to drop, i think. coming up, some more afterhours movers. palo alto on the move after reporting. get the details next. plus, the commercial real estate storm is here and our next guest says it's only going to get worse. whichl he is shorting the entire office space sector. you're watching "fast money" live from the nasdaq market site in times square. back right after this.

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well dom back to "fast money. stocks dropping as debt ceiling negotiations dragged on. the dow falling more than 200 points the s&p and nasdaq sinking more than 1%. after hours action in palo alto and vf corp. cnbc's ceo summit is happening in california. here's what david solomon had to say about inflation and what it means for the fed. >> there's no question that, you know, peak inflation has come off. you know, when i've talked publicly about this in the last couple of months, i sense that it's going to be stickier to come off its peak, but it's going to be stickier and more resi resilient, which is why, you know, we're kind of managing and expecting that why the fed may pause and it will be data dependent, you might need to see higher rates, you know, to ultimately control it some more.

>> it's like you are in his head, guy. >> he watches the show religiously. craziest thing and i happen to agree with him, as i should. jamie dimon said that. the only people that -- the only thing that's not listening right now seems to be the market because interest rates are starting to listen, as well. it's right out there, the fed has told you what they want to do they've told you, listen, inflation is a problem rates are going to remain higher we might not be raising, but not taking it off the table and be longer than people realize the only thing that doesn't get it is the market >> we spent 20 minutes atthe top of the show talking about two reasons why, outside of the united states, why there are inflationary pressures and we haven't talked about what's happening here, rebecca. >> yeah, no, i totally agree i think we're at a high for long, not a quick pivot to easing and that is going to have flow-through to mortgage rates, to housing, to interest sensitive sectors, commercial

real estate, among other things. so, i totally agree. i mean, we're not -- inflation isn't even close to their year-end target, which is 3.5%, and they're trying to get to 2% before they even start easing, or to handle that's not this year >> do you think it's -- >> i would love to have a two handle >> 2.99. >> we're not going to get there this year would major defl deflationary shock it is possible >> copper is at a low. >> right, so, maybe commodity prices help, but would wages, would layoffs picking up, i have a hard time seeing us getting there. >> yeah, i would just say, you use the term stagflation before, it's something we talked about for a long time. i think none of us invested in a stagflationary environment but one thing we kind of know is that it's probably not great for valuations, right? so, that's the one thing, going back to what guy just finished his little soliloquy or whatever

that was -- >> monologue >> the only thing that's not getting the message is the stock market, but it's not the whole market, it's, like, ten stocks in the stock market. >> right for more insight from the ceo council summit, stay tuned to cnbc all day tomorrow. and why wouldn't you head over to cnbc.com/ceo. coming up, an office space showdown why our next guest is shorting the entire sector and says the commercial real estate storm will only get worse. plus, netflix stock can finally order a beer the streamer going public 21 years ago today. and options traders are celebrating with some big bets how they are saying happy birthday, when "fast money" returns.

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(funky electronic music) (narrator) invest in. believe in. move in. grow in. build in. thrive in. all in north carolina. ranked america's top state for business. almost cursed on tv. >> almost. but i didn't i didn't >> welcome back to "fast money." it's a reopening trade vornado, boston properties, down 60% since the pandemic started in march 2020 many of the problems stemming from a stalled return to office plans and the issues may get worse. the chief investment officer at landen buildings is with us.

you came on the show, actually, at the beginning of the pandemic, that's when you said we are shorting. where are we right now in that hurricane phase? >> ah -- one broker described it at gale force winds. so, it's still raging. we were overly optimistic when we wrote that white paper in ma may of '20 we thought 40% declines in values, we have 40% less people in the office and probably going to have 50% 60% declines in the value of the office buildings. >> so, of that -- what were your assumptions about interest rate at the time? because that cap rate issue with interest rates here is, you know, that's an enormous -- >> yeah, the two things we didn't anticipate interest rates being where they are and inflation being where it is. >> those two things bigger than the other two? >> much bigger the -- inflation, if you have no rent growth and your vacancies are going up and you have giant operating expenses to run and office building, you're going backwards fast and that's one of the big surprises that we did not anticipate >> we've seen a lot of washout

for a lot of the stocks, sl green is trading back to, like, ipo levels back to 1997. i wanted you to walk through, if you could, a short you have on currently and just the sort of -- to give us character ickes of what you're looking for in a short in the space currently jbg smith is one of them >> yes so, we've been short the space since may of '20 there's not a lot of market cap left in a lot of the companies and i know a lot of the management teams, i feel bad for them, it's not their choice. jbg operates in washington, d.c. washington, d.c. is one of the toughest markets in the country today. we have -- and they have a substantial office support portfolio. i'm going to do the rule of 40 for them 40% of their leases come due in the next two or three years. 40% of their debt comes toll in the next two, three years. 40% of their rent comes from amazon and the government. and they have over 40% less people in their buildings. so, they have a real challenge

we know amazon is moving out that's 15% of their rent roll they're going to lose from their office portfolio going to be really hard. this isn't a work from home story anymore. this is a financing story. you know, it's kind of like the mall business went from the mall problem to the financing problem, now it's a financing problem and as the debts come due, there's really nowhere to go, because lenders aren't lending to the space >> historic trade, jonathan, congratulations. connect the dots what does it mean for local companies? because so many of these businesses are basically built on on, predicated on, people shopping in the area it's got to be catastrophic for a lot of these local businesses. >> you know, the mayor of washington, d.c. came out and was complaining that not forcing government workers back into the office and he said, we're going to have to dramatically cut the budget if we don't get people back in the offices to support all the local businesses it's going to be a real problem. the flip side is, it's happening in the suburbs people are working for home, going for coffee, going to the stores, the supermarkets are

doing better, but the cities are going to struggle. >> how will you know when it's time to go long? >> that's a good question. we monitor it, one of the things we monitor is cell phone data to see if people are going back into buildings we could put a box around every office building a company owns we're waiting to see uptick and just not seeing it but that's going to be the signal on the other side >> from your vantage point, how big of an issue is commercial real estate? >> it's a good question. i get a lot of calls on this and i'm going to go through the math quickly. $5 trillion of commercial real estate debt. people think it's going to take down the regional banking system the problem's office and that's a trillion. regional banks have about 600 billion. so, if you take a third hit to that 600, to $200 billion problem for the banks, i think that's manageable. the banks need to end will they're going to lend to apartments, parents are fine, warehouse, other sectors they are not going to lend to office >> jonathan, great to speak with you. >> thank you >> karen, where are you on your trade? >> i'm long boston properties,

which is sort of the premier name to be in. this is really just dipping a toe in the water in terrible sentiment, trying to think about, what seems to be the easiest short out there? well, you know, that -- office space, and good for him for being so far in front of it, but just seeing if they could get a deal done, not a crazy price so, it's -- i think we're going to end up in this sort of extend to pretend that the banks went through, and a lot of them will survive. i don't -- your question is the most important one how do you know when it's over you don't know until after so that's why i have a toe in. >> right >> i could lose a toe. >> right >> just not a foot >> exactly >> and i'm less optimistic than he was on the regional banks i mean, agreed it's not -- a catastrophic number, 200 billion -- the fed's q-4 numbers had it at 500 billion of total 700 billion in loans to office space and downtown realtors that

relied on the offices, so, $700 billion total of that $500 was small banks, small and regional banks. so, maybe if you take that number and you tweak it a little bit, but it's still the bulk of the exposure is in the regional banks and they are not just dealing with commercial real estate they are dealing with rates that are going to be higher for longer, if we're right, and they're dealing with more regulation, following the, you know, the companies going under that we've seen in the last month or two >> municipal bonds is something we seldom, if ever -- >> this may be the first time in "fast money" history >> 16 1/2 years. there's going to be a story there at some point, so, meredith whitney, way back in the day, she was clearly early, but -- i'm not saying she anticipated this but it's coming to a theater near you without question. >> all right, coming up, netflix shares riding a roller coaster and one options trader says hold on tight for another big drop ahead. that trade and more next. throughout may, cnbc is celebrating asian american and pacific islander heritage. here is the founder and ceo of

vizio. >> this is a place where everything is possible after college, i started my first career as a technical support engineer and today i run a multibillion dollar corporation. and 21 years later, we've sold millions of tvs and two years ago, i took the company, vizio, public, and now we're listed on the new york stock exchange. so, i'm living the american dream, grateful to be here, and awesome journey. [ giggles loudly ] ♪ jitterbug! ♪ [ giggles loudly ] ♪ jitterbug! ♪ [ giggles loudly ] [ tapping ] ♪ you put the boom-boom into my heart ♪

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the best investment you can make is to sign up for cnbc pro. now with a special offer scan the qr code on your screen or visit cnbc.com/pro for exclusive insights. moving on. break out the party hat's and champagne. netflix celebrating 21 years as a public company today since its ipo, shares are up an astounding 33,000% so, if you invested $1,000 at the ipo, it would be worth over $330,000 today that's actually the best investment, not pro. sorry.

meantime, netflix starting to crack down on password sharing in the u.s., sending emails to users today their accounts are just for people in their household. but options traders spoiling the party with some bearish bets mike khouw has the action. mike >> yeah, netflix was one of the busiest single stock options today, trading a quarter million contracts. 20% above average. and unfortunately, it seems like some of those options traders are not that optimistic about this the most active contract are the weekly 355 puts. we saw over 15,000 of those trading for $3.21. buyers paying a little less than 1% of the current stock price on a bet that the decline that we saw today could continue through the end of the week. >> how do you like netflix here, dan? >> i think it's probably getting a little toppy on the chart here i love this netflix to disney ratio, like, the market cap are almost equal, and when we get a switch one way or the other, maybe we're right at a precipice of an inflection point

so, the news has been so bad at disney and it's been really good in netflix for the last six to nine months. >> sounds like -- now i'm inside dan's head >> really? >> oh, geez. you don't want to go there >> a dan nathan pair trade is coming to again, another theater near you before, where dan is going to sell netflix and buy disney on the back -- >> that's what you would do? >> i think we're getting there >> told you. >> mike, thank you mike khouw for more options action, be to sure to tune into the full show friday. coming up, target missing the bulls eye recently and there may be more trouble brewing in the retail space what is going on with the consumer trade find out next. more "fa meyinwoston" t

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welcome back to "fast money. there is some trouble in the charts for two huge consumer stocks, according to one of our traders. walmart is setting up for an epic six-month double top right now. that troublesome $150 level. and take a look at target, completely erasing its gains for the year guy, you eluded to the charts earlier in this program. >> i don't know what that means, but if it means that i made reference to -- >> yes, it does. >> i did we have the crack staff pull up

a wall smart chart we said it gets up to that $155 level and fails -- that's what happens here and walmart is not a cheap stock. target is the one that really concerns me, because very quietly, target is at a six-month low here and in a market that's been doing okay, and with the valuation for them that actually makes sense, in a situation where they seemingly have got their act back together so, for target to be trading as poorly as it is, for walmart to have made that mid time double top, you have to be concerned about the retailers here >> what is going on with your target, karen? >> well, i have target and walmart. more walmart because i feel like they are in a better position, given where they are where the consumer is if you talk about the grocery business at walmart versus target, it's a very, very different thing. and what worked for target so well during the pandemic was not just groceries, but it was

really more of the home goods, the apparel, all of that is much higher margin, much better for target than it is for walmart. walmart is definitely more expensive, i feel it's a little bit safer place to hide out. i feel like they have a better inventory management remember when bill simon came on and called their inventory apocalyptic and target's made apocalyptic look adorable? so -- and they still haven't fully recovered from that. so, walmart is a little bit safer, though it's more extensive. >> does this speak to, rebecca, in your mind, broader retail, or this is walmart and target >> there's a lot of micromanagement decisions going on here with how the stocks are trading. i kind of reflect on that and then try to tie it to the broader consumer picture, the thing that keeps popping in my mind is just the bifurcation within the consumer. so, yes, people are getting more income, yes, the job market has held up relatively well so far, but even then, you get survey after survey showing that a

growing part of the population is having trouble making ends meet and so to the degree that trend continues, which unfortunately it probably will, can the management decisions continue t overcome that and navigate through this that would be the question in my mind, thinking about how the macro and microcome t come toger >> do you think they will be able to? they were not able to with the supply chain issues. >> right, if that happens again -- i mean, i think they'll do a better job. i think -- if that happens again and it's cat liz mick again, it would be terrible for them, but walmart -- both of them have been through a lot walmart more i think they'll survive. will it go down? yes. that's okay. >> up next, final trades sign. woooo! alright... ♪ soundproof windows.

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do not miss rebecca patterson at the virtual financial adviser summit on june 15th sca scan the qr code or go to cnbc.com to register let's go around the horn for the final trade. rebecca? >> okay. so, i want to sell the mdax, the mid cap export oriented china centric stocks in germany. doing that because they are still up 7% year to date

they haven't gotten hit yet like the casinos and the ecb is tightening so, i think that's a good play for china/covid scare. >> karen >> eww >> dan >> guy sees a double top walmart, i see it in netflix >> huh guy? >> faulty homes, sister. >> that's it for us. "mad money" starts right now "mad money" with jim cramer start 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 hey, i'm cramer. welcome to "mad money. coming to you from the inaugural cnbc ceo council in santa barbara, california. welcome to cray america. it's not just my job to entertain but to teach you

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