twitter. stay with cnbc because fast money begins right now. see you tomorrow. >> welcome to bizarre-o wall street as today had to be one of the strangest days on record. >> apple, let's call it a miss. >> you listen to the company. it because great call in terms of how much money we're really making and you think this isn't that good. it happens to be better than every other company many the world. >> the can't miss company misses estimates. then this happened. >> i think what we should probably do is go and split up investment banking from banking. have banks be deposit takers and make commercial loans and real estate loans and have banks do something that is not going to risk the taxpayer dollars that's

not going to be too big to fail. >> no more super market bank? >> your reaction is what? >> flabbergasteded. it's a little ironic, i must say, given the fact that his institution had the lead in pushing for the repeal. what's next? this is a bizarre-o edition of "fast money." >> live from times square, i'm melissa lee. we are seeing a huge decline in shares of zynga and along with it, facebook. zynga down 39%. it was a huge miss for their quarter. a one sent profit. a $44 million miss on revenues. the story here, surge in cost.

>> two people and then big competition from other people in the space. they are not the only game maker. and others that are out there doing much better work, apparently, than what the guys and gals are doing. i think they will be very challenged. and like i say, big read through into facebook tomorrow as well. >> 24 hours we will be dealing with the facebook results. reported as a pubically traded company. this is what zyga said. a decline due to a more challenging environment on facebook. also trade lower right now down by about eight and a half%. this stock, zynga, is trading at

$3. this ipoed at ten bucks a share. >> i am shocked. shocked that people do not -- are weaning in their interest in virtual farm animals. they continuely have to come up with the next best game. that is incredibly difficult to do. think about apple every three or six months they had to come up with a brand new product. a completely brand new product. i think you stay away from this. i think in facebook, there is a difference. you're getting a sell-off. the only reason why you buy facebook is you believe that mark zukerburg is the next steve jobs. you put them in your drawer and you wait 30 years and you will be a happy person. >> that is quite a belief. >> i think there is good evidence for it and at these valuations, why not? >> you are a buyer of facebook?

>> yeah. but that being said, it is for a very long term. he said he will not manage the company for the shareholders. you have to know that getting it it. >> we own a couple of competitors to facebook. we flattened out the positions. the ipo clearly expecting chaos. it comes down to where these guys are hitting on their profitability numbers of course. and we don't believe that. we're in a place where multiples of this size really have to be and they're not coming close. this is why we don't invest in the sector. >> i don't have much experience with farm animals. you are just making fun of zynga and facebookment there is mayor

company called general motors and guess what? that made a new low today. zynga is having a difficulty there. interest i interesting. we continue. take out 134.44 on the upside again, i think people will be surprised the move we will see. >> she will bring us all the updates. a little bit later on in the show. back to the markets here. in case you didn't notice, s&p 500 finished almost exactly flat. there is a lot of confusion on the desk about how to trade this market. it is great to see.

let's talk about where you see structural bull markets. >> you have technology spector at the top and the relative strength to the s&p 500 at the bottom. keep in mind the technical the bigger the base the higher in space, the bigger the top the bigger the drop and the longer the need for repair. the degree of the decline required many years before we started to see not only the relative strengths move up and out through this consolidation, but also more recently the price lift out. we think that technology is one of our structural leaders going

forward. >> a lot of people look at the failure at 13.75. there are many who think the opportunity is still in tact and that will. really going through a break out period that is slow and steady. >> tem me where you think we're going. the s&p 500 may be going higher. >> i think the u.s. has been out performing in the world. >> we're not at saul sheer that we will see it move higher. on its own we're a little bit query of it. >> so technology. >> there is -- what do you see?

>> this is interest interesting. not only did the 2009 decline hold the uptrend that was in tact in the early 90s, but then you have a pattern that looks like a reverse head and shoulders. and we saw the break out over the past few years. now it is con sol tating at the break out level. so we would think that any decline that we see in some of these out performing sectors should represent opportunities to buy. obviously selectively. you want to buy the stronger stocks. and within technology you know how fast something can be km commoditiz commoditized. >> you mentioned consumer staples. to me the mother of all consumer

staples is wmt here. >> the market can't rally unless you have it with it. it's really flat lined. so the broader market, can it rally without financials technically? >> it has been rallying since 2008, 2009 without the financials. so i don't know where, you know, that may not be valid any more. many financials here, we had a very significant negative diversions. remember the bigger the top, and had gotten out when the relative actually broke down. way up here on the financial price and saved yourself a lot

of trouble. had you not done that one would certainly have had to move away when the financial price broke this ten year top. so now you had the decline. but this is nothing near the eight to ten year repair that we have seen in technology. so i would say that we're still under performing. look at this. it's just recently off a new low. it has a long way and a awful lot of repair before we would be playing with technology. >> all right. we're going to leave it there. we really appreciate it. >> my pleasure. >> well let's stick with some of the financials here. >> authorizing a 1 billion share buy back at that point. >> billion dollar. >> billion dollar. >> shrewd move. the big settlement despite what

wall mark and other folks say, this was a big multibillion dollar settlement. i did think ability to 125, 125 126. but i still, i like the report. . >> brings in a fast line. >> she is actually monitoring a conference call. >> what stands out? have they given commentary on global trends? >> i have not been on the call but as far as the quarter, it was solid top line beat, solid bottom line. lower tax rate helped. you had significant upside on top and bottom once again. >> clearly the story is

international and that is a very exciting part of it. they are losing market share to mastercard. are you concerned about other forms of paypal or essentially mobile payment that may be taking some of the stream away? >> i think it's really premature to start to think about that. the simple answer is i'm not worried about that. we expect visa to be a big part of it. so mobile can still be a net positive for visa. >> so operating margins up i believe 58% is there still room there or are they hitting up against the ceiling? >> we don't think they are hitting a ceiling. this is still a model with significant operating leverage. as long as they are growing the line, we don't think expenses

need to grow as fast. certainly the big jump, we will not see the leaps any more. as we look ahead, we see no structural reason why margins shouldn't continue to expand. >> great smith, in terms of visa, what do we do? we had ubs cutting visa and mastercard to a sell. he said a consumer spending slow down is inevitable. >> there is a different story going on. a secular shift and visa is able to cook some of that slow down in the consumer spending. >> coming up next, you have all heard this today on cnbc. sandy weill thinks the big banks should break up. separating fact from fiction and separating all the earnings movers. big moves in the afterhours and we will give you the trade. stay tuned. >> want to beat the street? you better tweet the street.

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>> let's get to mary tompson. >> moving whole foods up almost $10 after reporting stronger than expected results. company seam store sales up a little bit. the stock is responding. >> thank you. 8.2% that may have disappointed. >> it is really keeping these

guys. >> absolutely. where do we go for whole foods? >> that is one of these companies that continues every quarter to beat their estimates and guide higher and beat them again. >> you want to do valuations? >> mid 30s. >> look at you doing your home work. >> this is an a all time high. it's close. >> when it does, you have seen -- you saw what happens to cmg when all of the sudden the wind gets in the sails. i'm not saying that will happen with whole foods.

this would be the place they would be hurt fw they are. doing just gang busters. so obviously americans want some of that as far as organics and so forth. they get a lot of it at whole foods. >> you know who loves organics? mike. >> come on, mike. >> that's true, actually. my wife is putting a lot of pressure on me. we actually recommended a 92.5% call spread. a good track record of outperforming. i think if anybody is inclined to press bullish bets is doing things like call spreads. you do want to mitigate the

risks significantly. when a high valuation stock starts to crack, you have real problems. >> let's move on to the next trade. calling for the break up of big banks right here. the wall street journal pointing out that while it was doing it. big break ups. and former morgan stanley ceo. who just last month in the wall street journal said that breaking up the banks would make them better investments. the call sparked a wave of reaction from notable voices on the streed. >> these banks are too big to manage centrally and they don't produce good shareholder value, either. >> it's nice to say the big banks should be broken up. it's very expensive to do so. you see the big banks trading at steep discounts. >> let's say --

>> work it out. >> let's say we reinstated this. which banks would feel the most impact? what would wall street look like? >> i'm not sure -- that seems to say that it would be negative. i'm not sure that the banks would feel a huge impact. >> i'm not saying it's negative but it would be an impact. >> clearly the big conglomerates. those are the names that would probably have the biggest impact here. i think they would do all right as long as it is a slow type of process but you can't have a shock to the system like this. we did go for 60 years and the economy was fine. i don't think it's such a bad thing to split them up. >> we also didn't have weapons of mass destruction. >> you call it a cds market. >> if you look at how the banks are doing, one of the things you have here, deutsche bank, they

have to delever. taking the balance sheet down, expecting more and more of this. we mentioned this with the j.p. morgan event. hitting a tap on the shoulder saying bring you balance sheet. that will continue to happen. you fwis are making changes only because legislation is forcing them. but i think the word has changed. >> but yet there are people in u.s. bank corps quired. it didn't make a fwmt. a bank trying effectively a four year high. >> go figure. >> and wells fargo, you throw them in there, too? >> let's continue with this message. it may have been correct saying that breaking up the bank could make them better? we have seen that play out so far recently?

>> i think there would be a great thing happening there. >> maybe over the course of a few years, yes. we talk about all of those i would say to the hedge fund community and i don't know that that stops it all. that is one of the reasons that the numbers have been coming down like this. >> thanks so much. morgan stanley is number of

about 15% is what i'm told. a 15% stake in morgan stanley commodities. don't know exactly what the price terms would be, but if you figure it being somewhere in the neighborhood of $5 billion, that's looking at the revenue. other issues swirling around as you guys just alluded. the rule would make the trading business a lot more cumbersome. another question out there on the regulatory front is can they continue to hold physical assets that they have? a big oil terminal business that morgan stanley owns. but, moving on, talent retention, another factor. apparently a lot of traders are getting rested when they think of new regulations and the landscape that they are looking at in the future. these are some issues i am told

a deal could be close. it has not been finalized yet. i am still tracking down the details and see how things play out. >> is this now a pattern? should we look for morgan stanley to sell off more of their assets? potentially breaking themselves up? >> i would be very surprised right now to see anybody embracing a bank break up. there will be alile bit of a wait and see what happens with november elections. could be a little more favorable. that might be something that people want to wait to see. and i still think that most of the banks believe strongly in the combination of different divisions in making it work.

the defd is in the details. i do think when it comes to owning physical assets and commodities is definitely an issue. now subject to that. it's also potentially an issue. >> kate, thanks for that. joining us from headquarters. we bring you the latest on the plunge up to the minute developments. stick with us.

>> welcome back to "fast money". live at the nasdaq market site in new york city. >> the company reported better than expected fiscal fourth quarter earnings and the company giving a very upbeat outlook for full year results, expecting earnings up $10 a share. and it's stock up almost 20% in the afterhours. because of its recent acquisitions. fwen, western digital trading

up. >> it had basically -- also moving the afterhours session. that was one of david's largest positions. >> just when you think. >> even with the current price that is trading at post market it makes them extraordinarily cheaper actually on a valuation basis. >> what makes him about five and a half times earnings. that's with these numbers priced in next year around four times. a chart that had good technical support. some back filling if you're a technical guy this stock can hold on to this. >> let's get to the other big mover. down sharply still after missing on eps as well as revenue.

jul julia, how is the conference call so far? >> mark is answering some questions from very pushy analysts right now asking about the numbers. in the face of the dramatic sell off, he is really stressing two areas where he sees massive growth potential. the large audience on the web is moving to mobile and noting that the company grew its mobile footprint to 33 million active users, making it the largest mobile gaming network. it's investing heavily in mobile games. the company's ad revenue grew 170% yaer over year. the problem being of course that pairs were shifting from the web's mobile devices and also that fewer of their gamers were

paying to play. >> zynga is working closely with facebook. we're seeing this hit zynga stock and facebook stock pretty hard. >> just for the person out there who may not draw something explain how it is impacting. impacting them that they are not going to facebook. >> zynga has a couple different models.

30% of the revenue that goes zyng a a. 70% of that revenue fwoez to zynga and 30% goes to facebook. if people are spending less money in general, that's bad news for a facebook as well. they are just playing apps instead of games. they might download a mobile game, zynga makes those as well. buy it for a dollar or not spend any money to buy it, or play it for free on the mobile device. the cut is going to be smaller. facebook has yet to show.

we have not seen any of the results just yet. how is facebook going to make money from this as well. >> thanks a lot for that. we will check in with her a little later if something happens on the conference call. pushy analysts, you know? i hate those pushy analysts. >> those are my favorites. >> my favorites, too, actually. be sure to tune in tomorrow. we will be talking to gold corps ceo and 3d system ceo after those companies post earnings results tomorrow. very, very big show tomorrow. you were mentioning before the virtual goods. >> come on. >> when the company first debuted, that's the most

brilliant business model ever. >> right. it is brilliant as long as it works. your margins are astro nom call. but in this case, people are not buying. >> the reason so many people on the desk are making fun of zynga is it really is the emperor's new clothes. how long will people buy virtual goods? >> those pigs and cows are real. >> you're notice iing.

>> maybe you wouldn't have expecked to see a lot of bullish activity. tablets, pcs and mobile phones. today we saw somebody come in and we saw over 6,000 september 15 calls this is about $12.60 stock. somebody paid 50 cents for those things. this stock only has a float of about 58 million. that represents over 1% of the float on a bet that the stock could be up 23% by september exploration they will be announcing earnings on the 24th of august. >> you have been in and out in the past? >> these guys are two of the folks that have provided various lenses and cameras to the likes of the iphone and other places. i will be watching this one tomorrow.

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>> welcome back to fast. hedge funds having a tough 2012. north american index up. compare that to an over 6% gain. what is behind this underperformance? what can be done to turn it around. joining us now, global head of prime finance. barry, good to see you. john pahlsson, are there common themes here in the hedge funds that are underperforming the markets and posting poor performances? >> the first is that the headline number masks an awfully good performance. i would say overall they had the

pleasure of partnering for the conference last week and two of the themes that came out were the concern about the fiscal cliff and what impact they would have on possibly growth rates. as well as concerns of the health care and financial sector swinging on the presidential election. in europe you would have a lot of concern about the sovereign debt crisis and how that is affecting people's willingness forward. you have got folks like pete who reminds me of eddie murphy. not yet not yet almost. >> in terms of these concerns, these are concerns that all investors are dealing with but not all. how they are managing to deliver the alpha. what are the most successful

ones doing right now that is working in spite of these concerns. >> look, i would say i feel pretty strongly that the hedge fund industry while under pressure is actually doing well and going to continue to do well because of the secular demand. the $350 billion gap in 2011 in the s&p 500 pension liability space. it will keep money flowing into the space. in terms of specific strategies, it is a stress base. it is the credit players who are able to step into the place since banks have deleveraged. >> is there a sweet spot in the hedge fund industry in terms of assets under management in you mentioned the need to invest in alternative assets because they are under the water at this point. at the same time there is

probably aknologiment that if a hedge fund is too big. >> there is 20 billion of ip flows from the first half of this year. what that masks is a net inflow to funds first in the outflow for funds. they are less control in the operational business risks. it's easier to make that brand name choice. >> great of you to come by. barry from deutsche bank. bk, you run money for other people. what sort of demands are see

seeing from clients these days. >> i think exactly what barry talked about is comparing the hedge fund world to an s&p 500 return of 8%. you are getting into it for diversification in your asset classes. a hedge fund is probably not the best thing for all of your money but a good thing for part of your money. there is a lot of interest in what i do. whether you're in the currencies, fixed income, commodities, that type of thing. and that gives you goody verseification. but when the s&p 500 is down, you probably do pretty well. >> afterhours action. very big mover here. >> better than expected second quarter results. the company giving positive guidance for the third quarter as well. sees third quarter earnings between 40 and 42 cents a share. on a revenue it sees revenues

ahd of estimates. analysts looking for $330 million. this is all for the third quarter. the company beat estimates by six cents a share earning on an adjusted basis. it has been benefitting from increased demand. it makes products and speed delivery. >> thank you so much. coming up next, soaring to record second quarter profits. we will give you an exclusive look. much more fast right after this. [ female announcer ] want to spend less and retire with more? then don't get nickle and dimed by high cost investments

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coming up next hour, buffalo wild wings singeing today. >> airline stocks have had a rough go of late. jet blue is one of those airlines, reporting the highest ever second quarter profit to tate. i took a rare look inside the company. ♪ >> lower fuel costs may be benefitting the airlines right now but one company is not counting on the smooth ride to last forever. i went behind the scenes to even

the maintenance deck to discover how this airline innovator -- >> we are using the latest technology engines. we are water washing the engines actively. >> yet blue is working to develop a new wing tipped device that will reduce drag and save on fuel. >> partnering to create eco-friendly jet engines. >> we are very bullish. >> jet wlu's fleet consists of 175 aircrafts will be flying to 75 cities by the end of the year. getting the flights out on time can be tricky but it's another crucial part of keeping costs in

line. >> this is the nerve center of the airline. our system operation center. anything that happens at the airline operationally is coordinated or controlled here. >> what are they monitoring? >> this is our flight track. we will use that to plan the rout we're going to fly. >> you're anticipating any scenario that could cause delays? >> it's so important that you run on time and don't cancel flights. it's very expensive to delay or cancel. >> that means the biggest problem for jet blue fliers will still be opening the bag of blues. ♪ >> how would you characterize what your proposition is for the consumer? >> i like to say the fair fare. no overbooking, in flight product that you don't have to pay for.

first bag is free. >> we will not nickel and dime you to des. -- death. we don't charge for that. >> we designed terminal five as a customer centric building. >> some people may ask why bother. on once. >> are you in play? >> i truly believe independence for jet blue. i think that's the best path forward for shareholders. >> fuel costs are coming down but the capacity in the airline is also shrinking. >> operating margins.

that's sort of bodes well. >> the dynamics of the airline intusry have improved dramatically. >> coming up next, get excited. day three of the fast money olympics is kicking off.

>> we are just days away from the opening ceremonies for the 2012 olympic games in london. we will be off the air for those two weeks. >> whoa. >> unfortunately we will be. of course there is halftime reports, still. absolutely. we are holding our very own version of the greatest tradition of sports. each day we are bringing the best investments in categories related to the summer games. when we return we will reveal the gold medal winners. today's picks come from the many

companies that are sponsoring the olympic games. >> obviously apparel big name. >> do more, feel better, live longer. make the breathe right strips. the stocks have been making higher highs and lower lows. >> great cars, great engineering and the euro will be getting cheaper throughout the summer. i think that makes these cars even more attractive. i love bmw. >> it's interesting. i picked a high valuation stock yesterday. it is a company that is under a lot of pressure from economic factors but the calls are cheap. >> all right.

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