♪ welcome to new york city times square. dr horton ceo talked about higher interest rates causing cancellations. take a look at what the analyst said about the selloff. she said it represents a revaluation of the group to reflect more normal growth. our question tonight is will sales data and fed talks next

week take out the housing stocks once again? how do you play this pullback? >> i didn't think you don't play this pullback. they're extremely volatile. and frankly, they've already gotten killed. i don't see anything in any of the reports we've heard so far that tells me that this is a hiccup. i think that what this really is is everyone's going to take their expectations down a bit and truthfully, we don't really get stellar numbers for july, for august for quite some time. this housing thing could turn into a work situation than what's currently expected. we just don't know, it's too early. >> very, very pretty. >> crazy. >> when we're talking about the housing market, i think you have to talk about the overall market. i agree with josh. i don't think you play based upon what's going on, or you play these guys based upon their valuations. i'm looking at the market. the sales data doesn't do it. the fed, absolutely. if we look at where we are in the month since the fed last spoke, the market's been down three times. only three times. ultimately the fed had to backtrack on the monday after

three days where we went down 5.5%. watch the second quarter gdp, but definitely the payroll number on friday is the bigger thing. so in other words, that's one of the two or three fed numbers we have until you finally get to the september meeting everyone's counting on. >> and fed and payrolls equals interest rates. no question that interest rates affected sales in the quarter. no question. he was disappointed by the violent move in interest rates. >> as he should be. trying to curry favor with you, by the way. >> i'm just calling it what it is. >> nice job by you. >> i think these stocks -- i'll take the other side on this one. if you look back in april quarter, that's when the stock topped out about a week after they reported. i think when the news is at its worst, nader -- ralph -- again, it's all worthy. >> you got to be careful here. i'll tell you why. >> it's a 16 low, which is basically a 15% correction of

this entire move from low to high. that's a pretty interesting trade for me. >> i think the thing with pulty, they had a major miss on a lot of different metrics, whether it's starts or revenue or earnings. >> why do we have to make it complicated, though? we talked a gazillion times about home depot. i know it's not the stereotypical housing trade, but it is the renovation trade. it is the housing trade. >> you're basically saying i'm not going to touch that. >> and by the way, guy, your hair looks very pretty. i would say yes -- exactly. i would say i'm not playing the home builders. the consistency in earnings and the chart makes me a buyer of home depot. >> if you don't like housing stocks themselves, where do you go in the sector, if anywhere? >> we liked home depot for a long time. i think just that whole concept has kind of played out. here's the issue. the housing stocks became a momentum trade.

the trade work, kept bouncing off the 50-day. you look at the xhp. once that's over, we don't come back. we go on to the next thing. you're going to see this pattern, i think, of lower highs. you're going to see people getting out of them on rallies quicker than they used to. there's just really no play here for the momentum traders. so if you're just buying these on value, you've got to wait. you've got some time. people became a very crowded trade this spring. everyone understood this renovation trade. actually look into how they would try to deliver their numbers. they were already benefiting from home builders, from contractors. so i think you look somewhere else. there are 8,000 companies you can look at. these have gotten a little bit too tough. >> what we have had has been fine. there's probably some lag between the higher rates that we've seen to where this ultimately goes. but to me, everything we've seen by the fed in terms of who they are targeting, nothing's changed. and these are valuation dependent stories, when they've gotten ahead of themselves, they've been knocked down.

that's how you play it. >> housing may have gotten hit, but the markets are on track for their best july performance in three years. so can anything stand in the way of the bulls? for more, let's bring in the cio. we're used to seeing you by the plasma with a bunch of charts. congratulations on your new position. >> thank you. >> 1750 is where you've set the s&p 500 target for the year end. >> well, look at earnings. they're actually not that bad. i think it's about going into earnings season. if you look at earnings for the financial sector, they were the strongest for the s&p 500, and voila, the banks reported really good earnings. we have the banks breaking out with stronger earnings. i thought that was a really good sign that the markets could go higher. >> you also see the markets going higher and gold going higher and a rotation out of bonds? >> well, we've been talk about the great rotation now for two years. now we're starting to see early signs of this starting. with the interest rates backing up, we're starting to see money

coming out of the fixed income market, and we're finally seeing money now flow back into the equity market. we also changed our asset application at the firm. we increased our equity exposure and reduced our bond exposure. >> just to follow up on the gold question. so you like the minors. >> you look at where the gold miners are, they're not that far off from their 2008 lows. if you really believe the metal is going higher, the most depressed part would be the actual stocks. so at this stage, i would rather buy the mining stocks than actually go into gold. we still recommend gold as being a hedge within a portfolio. but then there's the tradeoff. >> something tells me gold's going lower. the one brain cell. it's a one brain cell. but ultimately, people say more risk going on. i don't need to hold gold. >> what do you think it's a hedge of? just out of curiosity. inflation or an economic catastrophe? >> it's all of the above, right?

gold really has become a storied value again. remember when we had the whole thing with the euro in greece, and a lot of people even treating gold as a fourth currency, because we don't have a chinese currency that's in the mix. i think it wears the hat for inflation, and it wears the hat just in case something goes wrong. it's that diversifier. but we don't recommend a lot. maybe around 2% or 3%. >> if you could put it -- where does this s&p break down in your opinion? what levels, if we breach, does it get a little dicey? >> as long as you're above 1650, i think the market's fine. >> i know you're negative on emerging markets. what do you need to get to 1750? to me, great earnings in the banks. we've gotten a little tired in tech. i think you at least need something out of the resource trade. i think you might need china. but i know you're very bearish in terms of at least the rest of the high growth load. >> in the near term, we're more cautious on emerging markets. longer term, we still like them. i don't hear enough people talking about energy stocks.

crude oil has been rallying. we at the firm are talking about u.s. innovation. and within energy, you have fracking and that's really transformed our energy sector, to the point where we believe we can become energy independent. also in u.s. innovation, we have technology. cloud computing, cyber security stock bought out this week. so there's a lot of exciting things actually going on in the market at the theme level. >> thanks for coming by. always good to see you. the cio of portfolio trades. starbucks soaring to top all-time highs. raised its full year guide citing increased consumer traffic. you highlight these very things. >> you're crazy, right? >> i thought you made them up. >> improving margins. continues to be a growth stock. so do you chase starbucks on monday? no. four times normal volume. but again, every time the stock is pulled back, it's been a

great chance to buy it. i think that's where it is right now. >> i think this is one of the great big cap high growth stocks you actually have. in 21 1/2 times in 2015. it's not cheap. but the bar is very high in the u.s. it's not very high in china. 9% growth in china. this to me is the great multi-national play right here. next up, jcpenney and microsoft hedge fund manager with a bet against jcpenney. also closing on his long-term position in shares of microsoft after seven years. josh made some interesting comparisons to a baseball player. >> einhorn basically said in 2006 we compared microsoft to a-rod, which was a favorable -- it was a compliment. now we still do but it's not quite a compliment. it's interesting when you see einhorn who tends to be very patient, not throw in the towel because he did make money, but walk away without a big gain, clearly not the big payoff that

he would have expected in '06. i would be really concerned as a microsoft long if he's throwing in the towel after seven years. the company -- forget not growing, the company is actually shrinking. >> but he got what he wanted in the last two months. >> value act capital came in. maybe took some of those shares off his hands without them realizing it. but nobody could argue that they've solved any of the issues they had in '06. >> he probably sold a pretty decent time concerning microsoft's record hire. >> on the flip side, though, is this a sign that the trouble is over for jcpenney? got to go to the jcpenney side of this. >> we started to shevell thlve r a while. there are clearly still issues. >> finally, tesla, we may have been a little early.

he told everyone to buy the dip. take a listen. >> i actually bought it today. we've been bullish. can't fight the fed. >> tesla, mentioned it before. tesla. >> so powerful. >> a nice boost with an upgrade to a buy. $160 price target process. >> you've got to have the stomach for this one. this stock has the characteristic of down 23%, up 74%. you've got to have a steel stomach. but deutsche bank is looking at this thing as more than a double in the next few years. i'm onboard. i'm waiting until the momentum is out of it. coming up next, the next big meeting. the ten-year sits at 2.55%. talking about how portia doubled its sales to one specific group in the u.s. a look at who is driving those high-end sales a little later in the show. stay tuned.

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time to fast forward. ten-year treasury rates pulling back slightly today, but still up more than 50% in the last three months. so the big question ahead of next week's fomc meeting is what

will chairman ben bernanke do about it? >> i'm not smart enough to say what he's going to say. i don't have the lack of humerus he has either. i'm not in the camp. i think we push back down towards 2%. i'm probably in the minority. >> the ten-year failed this week. and ultimately, i think that's a level that's going to have to prove it can get through before talking about 2%. i think the fed has a lot to do to at least reclarify where they were in june, and they may -- look, it was a disaster how they communicated the market in june. they had to come back with a bunch of fed governors on monday, the 24th and 25th. i think there's a lot of pressure going into this meeting, because markets have been totally benign. there's been no volatility, this worries me. i would certainly be short yields. i think they're going higher. >> let's get over to asia here. japan hoboasting its highest inflation rate since 2008. what should we be watching next week out of japan?

>> i just think the mere fact that they've been able to create inflation is probably getting people talking about it this weekend. look, you've had a nice pullback this week on japanese stocks. you had an increase in yen, which is the preferred vehicle of choice that everyone's using to play japan from here in the united states. i think this is right where you want to be involved in it, if you missed the trade earlier. some increase in bonuses that i think tim can speak to. when you see that kind of thing start to happen, then you've got to look at the japanese auto makers and that whole chain of events. >> i think the boj, you would have expected more down 3% this week in the topix, which gave mr. abe and his team all that they need to push through structural reform josh is talk about. unlike the fed, the bank of japan is ready to accept negative real rates. they are going to push on this.

cpi last night does not matter. can outperform the s&p the next few months. >> the biggest movers of the week. troop adviser up 22% this week. >> ridiculous second quarter on wednesday. i mean, the stocks had a huge week. but also has a huge valuation and a huge short interest that i think sort of got liquidated this week. you can't chase the stock here. i don't know if it goes lower from here, but i can't in good conscious tell the folks to go get long. >> drop for broadcom. >> the entire space is under a lot of pressure. broadcom is a conduit for that. i think it's something you stay away from. in other words, i am not buying this weakness. >> facebook a pop this week, up 38%. >> let's call this what it is, an eruption. this is the single -- >> wow. >> this is the single biggest in

the market this week. this is a mega cap of 30% in one week. >> stay with it, josh. fight through, fight through. >> you guys can giggle. >> it's a violent, forceful, very descriptive word that you chose. all right, moving on here. >> i'm helping the people. it's an eruption. >> etrade had a good day. but a better week, melissa. it's moving higher in anticipation of rates going higher. people think it's overdone, but the momentum is not out of the balloon yet. i'd still be a buyer. >> and lastly, earnings analysis, bruising and royal bundles of joy. here's our week in review. >> i hope all the world can hear that. >> i worked for them for a brief period of time.

>> an hour? can we clarify? you were the uniform for a short amount of time. you didn't work for them. you weren't delivering any packages. >> should hand him that harvard diplo diploma. >> i didn't write it. >> let me explain to you why i think it's right. >> we came in with tom petty. steve and the losers get lucky sometimes. proof positive. his wife is here tonight and she is stunning. no offense to me. you know what the best thing about that baby is? that kid has the best teeth that it will ever have right now. >> one of these days. you're going to get it. coming up next, porsche finding new sales growth in the u.s. the specific group behind the booming sales just might surprise you. we're going behind the wheel of the boxer and the cayenne and that is next. >> fast money means trade. everybody's got to bring their best information each and every night.

the entire trading day is the preparation for the show that night. >> it's idea generation. it's all about giving you a frame work for how to look at the market. as the world has changed, our show has evolved.

. it is the luxury of many a midlife crisis, but now porsche is finding huge sales growth from a new and surprising place. phil lebeau joins us with that story from chicago. hey, phil. >> over the last couple of years, portia sales in the u.s. have been red-hot. here's one reason why and you don't need to go far to find it. look at who's driving primarily the portia cayenne. that's the suv from portia. sales to women, primarily in the cayenne category, they've doubled in the last two years. 15% of portia u.s. sales are now to women. just a few years ago, it was only 6% or 7%. attracting owners not only into

if-the-luxury brand from other vehicles, but also other luxury suvs. >> i never thought i'd leave lexus. very easy to drive. but this has an element of fun. it's really hard to explain. i have girlfriends that want to know why do you love this car so much? it's just fun to drive. you really have to drive it. it's comfortable and it's fun to drive. >> well, you ask the porsche dealers and they will tell you they've really picked up with the win. the porsche corporate offices will say they're not targeting women, but they have expanded their marketing to a much broader audience. we're going to see this continue over the next cup of years. when you look at porsche's sales in north america, easily outdistancing the market as a whole. look at the gains over the last four years. in some cases, that's double what the market as a whole has been doing, so porsche clearly has found the right mix of vehicles to appeal not only to men, which they always have, but

now increasingly to women as well. >> but the suv is ultimately i think a market that's been exploding for everybody. so granted, i hear what you're saying. isn't this part of that breakout? because everybody wants the own an suv. if i can own a porsche suv, i don't care if i'm a guy or girl. >> it's going to happen even more in the future because they've got the mccann, a crossover utility vehicle, which will come in just below the cayenne. that's going to attract even more people into the porsche brand. they really have hit the sweet spot in the last couple of years in terms of identifying what people are looking for in the ultra luxury car, and coming down market without diluting the brand. >> i do want to ask you about what you tweeted out a short while ago about the 787 and changes being made to the engineering crew. >> yeah, the chief project engineer, and really the person who has been front and center in terms of taking a lot of questions and a lot of heat over the battery issues with the 787, he is being replaced, being moved out of that job into another product development job.

they're going to bring in another chief project engineer. the person who was chief project engineer on the triple seven. so boeing is positioning this as we've got a lot of talented engineers, we like to move people around. but for mike, it means he no longer is front and center in terms of having to answer a lot of questions about what's been happening the dream liner. >> all right, phil. thank you very much for all of that. phil lebeau in chicago for us. in terms of there's a couple of things we could trade here, but boeing first, let's handle that. >> the reversal in boeing after those great numbers scared me, so i think again, i liked it going in. the reversal scared me, so got to be really careful. >> all right. why don't we hit the final trade here? it is a friday show and it is that time. tim. >> bhp, china said they're going to be taking a lot of excess supply in the resource sector. very good for minors that can stay the course. >> coal still a scary space. use it 395 a stock just in case

it doesn't work. >> europe is up 8% this month, outpacing the s&p 500. i know we're all supposed to treat europe like a headwind. guess what, things are changing. >> pulte homes. >> really? buy pulte on the pullback? >> come on. >> absolutely. i'm melissa lee. thanks so much for watching. see you back here monday at 5:00 for more "fast." "options action" begins right after this break. have a great weekend.

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this is "options action." tonight, who you calling small? small cap stocks continue to make record highs, but there's a big warning sign every investor needs to watch. brian will reveal what it is. plus, miss the rally in facebook? >> doh, doh, doh! >> relax, because scott nations has a way to double your money in just two months. you will like what he has to say. and why are options traders expecting a bombshell from herbalife earnings? a special report. the action