>> i was wondering. thank you so much. elon, appreciate it. kayla. thank you very much for joining us on "closing bell" today. that does it for the program. over to "fast money" now. melissa lee, what's on tap? >> one biotech stock was up 24%. we'll name names and give you the trade. >> all right. straight over to you guys. >> thank you, kelly. "fast money" starts right now. live from the nasdaq marketsite overlooking new york city's times square i'm melissa lee. our traders on the desk are tim seymour, brian kelly, karen finerman and guy adami. a big sell-off but we've got two secret signs that the selling could soon be over. plus apple falling hard on a bearish note from jeffries. we'll tell you how much pain they think china will inflict on apple's stock price. and later the cio of a $70 billion asset management firm says china is already priced into the market and now is a great buying opportunity. she'll tell us what she's buying right now. but first to the broader sell-off here. all three major averages seeing more than 1% losses. but there's more than that. oil and bonds trading at financial crisis levels. the dax in correction territory.

and all this comes as it's been more than 1,400 days. 1,400 days since our last correction. with today's move lower the dow is halfway there. begging the question are we seeing the start of the next correction right now? guy, what do you say? >> feels that way. the bond market, i think it's trying to tell you something. i think it's been trying to tell you something for a while. now we're significantly below 2 1/4 in the 10-year. commodities. listen, i understand supply is a big component of this. i still think demand has a lot to do with it as well. i think that's trying to tell you something. the russell, the iwm, 121 was the level that we had flagged. closed there yesterday. the final piece of the puzzle is the s&p. 2050. if we close below 2050 things can get dicey pretty quickly. >> what will the tipping point be this time? we could have said a lot of what we said in the beginning before and yet it didn't stop the s&p 500 from staying close to record highs. >> i think it has to be earnings

again. i think you have to hear from companies and we have to get downgraded in terms of their outlook. and if i was going to pick an index, though, i'd be focused on the nasdaq because i think the russell's already broken. i agree with guy. 1200, you have to look at that. 2100 ultimately you have a place where i think the nasdaq is the one that is still close to stratospheric. the s&p today went down kissed the 2074 or just got there. we've done that two out of the last three days. it's shown very good support there. but a lot of places have already corrected and we know all about commodities. we all know about some of the currencies. we know about emerging markets. a lot of the autos, industrial stocks. so to say that this is just -- i think actually you look below the surface. we've been calling it. >> i feel like you only know after when the correction started. so i don't know if this is it or not. i mean, to me i think what the fed does in september will be key here. but i just can't trade around things. i've got to find things i like but if they come in cheaper i'll be buying them cheaper. too hard for me to time the market.

>> a lot of things are cheaper today. >> they may be cheaper tomorrow. fossil was a miss. down a few bucks. >> brian kelly. >> one thing that's different about let's call it's last five, six years is we've had this rangebound market. it has been directionless. hedge funds, investors, people are looking for whatever that direction's going to be, and when it breaks everybody's going to pile on that direction. we're at a very critical point in the s&p 500. we bounce today where we bounced yesterday or yesterday morning, right on a long-term trend line that goes all the way back to october of 2014. so that's very critical. obviously 200-day moving average. very critical. if we don't bounce here, this is what you watch for. everybody's going to pile into that. and you can see this correction accelerate. >> fundamentally what has changed in the story? >> earnings expectations. >> look, i think the deflationary forces that we're looking at around commodity prices people are trying to

price into the global growth spectrum and the thing that might actually put us back into the same mode we've been in, brian, i think it's central bank policy. china is beginning some monetary policy shenanigans. we'll talk about that later in the show. but ultimately you have a place where central banks around the world with the exception of possibly the fed are the ones that are going to continue to kind of grease the rails here. i'm not sure that much can change even with the fed who i think will hike in september. >> let's be clear. we have seen a 9 1/2% move to the down side. so without getting too -- i know 10% is correction. whatever you want to term it. we have seen a move like that a few years ago i believe and let's -- the market has looked past every piece of bad news for the last ten years. it feels like it's different at this point. >> oil one of the many things weighing on stocks today. our next guest says the commodity crush is actually a good thing for stocks. ari wald, oppenheimer's head of technical analysis, is breaking it down at the smart board. what are you looking at?

>> i'm looking at the long-term trends. i agree near term we are setting up for this correction we think conditions do have to get worse before they get better but we want to shy away from getting too bearish here because we think the long-term cycle is intact. here's what i'm talking about. and here's the long-term relationship between the s&p 500 and the equal weighted commodity index. and essentially, lower commodities good for stocks. you know, if you really go back, long-term down trends in the commodity index coincide with long-term up trends in equities. we saw it in the 50s. commodity down trend. equity up trend. we saw it again in the '80s into the '90s. commodity down trend. coinciding with a secular bull market in the s&p 500. and once again we've had this big top in commodities. broken secular trend. down trend. now coinciding with what we think is a secular bull market for the s&p 500. near term is where we do indeed have some concerns. s&p 500 has been sideways for

the year. it's been in this range. we think the range breaks lower. and you just have to look at volume. market's been sideways. if you look at the new york stock exchange, advancing volume net of declining volume, on those shares declining, has been trending lower for a number of months here. this is indication of distribution. this is a concern. this is to show that investors are more eager to sell than to buy. we think the number we're targeting on the s&p 500 is 1970. this would mark a 7 1/2% peak to trough decline. it's going to hurt in this market environment. we haven't had it for a while. but that's actually very consistent with past bull market corrections. we think this would be healthy. we want to have some cash on the sidelines to buy that pullback. >> the chart you showed before was the equal weighted commodity index. does it change when you go to the regular crv which is much more heavily weighted to oil which has really been the source of pain in the commodity complex. >> it's the same story with oil as well.

and we ran the numbers. when oil's below its 200-day moving average the s&p 500 tends to have a better forward performance when oil's above its 200-day moving average. we think this is lending a cyclical floor, if you will, for the s&p 500. >> hey, ari, brian. i'm curious, those periods you pointed out in the past were periods that followed very high inflation, the very high inflation that happened during world war ii, very high inflation that happened during 1970. we haven't seen that at all. this has just been essentially commodities were flat and then crashed. does that change your analysis at all? >> no. and i think you bring up a great point here, brian. in order to get the bust you need the boom. and we haven't had the boom yet. and i think that's what we're seeing in commodity prices, more mid-cycle conditions rather than late cycle. and without that boom we don't think you get the bust. >> ari, going to leave it there. thanks for coming by. ari wald. do you buy what ari's telling us? >> there's a couple reasons why commodities are going lower. this is also different. not only do you have supply issues. i'm not sure we had before.

we're seeing an oil revolution but i think technology is a very significant inflationary force around the world. it's one of the reasons i don't think the consumer's going to be as much of a spring into a weaker commodity environment. what i do think he's saying is there's nothing wrong with equities pulling back here and commodities getting weaker is not a sign of a global economy that's about to implode. that is my view. i actually think commodities are bottoming and we've got-tone levels where cash calls are very interesting and it's going to be a place where commodities have started even i think to find that bottom. >> 1970 on the s&p. >> 1970. below 20 50 or 54, whatever i said, it's not a stretch to see 1970. but let me say this before we get all crazy. we have flagged trades that work with the commodities. look at tesoro today. all-time high. look at valero today. within a whisper of an all-time high. we've talked about the refiners being the way to play energy and that has worked. >> within energy where would you go? >> you have to go with the refiners.

that's the play. i think oil -- i'm with tim where we could be in a bottoming process but it wouldn't surprise me to see them overshoot. i think oil goes to 36. wouldn't surprise me to have a 20 handle on it if we really get crazy. >> it's interesting to see the osx and the oih significantly outperform oil. >> kafrk ocarving out. >> i'm long a little bit of the oih. i think -- i do think that for that -- i think it's telling you something. how it continues to outperform. >> coming up next, a down day for the markets but there was one breakout biotech mover that surged more than 26% in today's downturn. we'll tell you the name and how to play that move. plus what might google's new corporate structure have in common with warren buffett? a little more than you might think. and we've got the details on what exactly that is. and later, beakers breaks down the real winners and losers on the back of china's yuan move. and some of the sectors just might surprise you. all that and much more ahead on "fast." a new season brings a new look.

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news alevert on berkshire hathaway. dom chu's got the details. >> standard & poor's has come out with a statement saying they could potentially downgrade the

credit rating of berkshire hathaway possibly by one or more notches within the next 90 days. the reason they're doing this of course is when you spend 32-plus billion dollars on an acquisition like berkshire is doing with precision cast parts and you use a lot of cash to do that the amount of cash that you have, the leverage ratios, everything else, your company becomes riskier in essence. so standard & poor's coming out again in a press release saying they could perhaps downgrade the rating of berkshire hathaway. currently it stands at a aa rating, which is the third highest rating that you can actually have. berkshire hathaway getting some perhaps interesting ripple effects here from its possible acquisition or signed acquisition of precision cast parts, melissa. back over to you guys. >> dom chu, thanks so much. i would imagine this really matters if you're going to tap the capital markets. but seeing that they're paying all cash anyway for this deal i would think it's not as big of an impact as it might to be

another company. >> it also matters for the insurance part of the business. i think it's a non-event, however. it's berkshire hathaway out there. there's plent/of other names you could downgrade. >> big down day for the refiners. the one area of the energy trade that is loving the collapse in crude oil. the entire space was on fire. tesoro, for instance hitting a year-to-date high, valero soaring, american petroleum rallying more than 4%. beakers, you said this is the place to be. >> it is. right? when you're looking at the two different types of oils, you have brent oil which is your world price and then wti which is your u.s. price. and wti has been down much, much more than brent, and that's because we know we have this shale revolution going on. these guys are making the product. the products are actually doing much better than oil is. so the spreads are enormous. the one thing i would say you're going to start tote goi get int seasonal maintenance period. also the end of the driving season in the u.s. you may see some names in

decline. i'm not saying short but take off at least a third as these things go higher. >> do these things trade seasonally for exactly that reason. >> i think historically maybe that's the case. i don't think that's the case now because of the move in the brent wti spread that beaks was just talking about. look at the report, look at the earnings report tesoro just had. it was crazy strong. valuationwise they're cheap. i think these stocks despite the tape can still go higher. >> macau acasinos, mgm, las vegas sands. gaming revenue came in 6% lower than the average in july. broader china reaction here. >> melco's had a nice run. they've been following these less bad kind of prints out of mac macau. if you listen to macau their second quarter numbers are good. weak vip. also the premiums getting slightly better again down single digits, used to be down

20%:30%. to say macau's going to turn on a dime especially with the regulatory concerns, fresh attacks on smoking and bans that are going to change the casino life i think it's time you trade. i think 25's the high range. i think 18.50's a proven low on melco. this is the environment until things truly inflect. but right now less bad, yes, i think it is stabilizing. you can make that call. >> you you don't have to necessarily panic out of these names at this point in time. we know the story macau. you look at something like wynn, which is the one i keep an eye on and that is rangebound. you trade these rangebound. not a lot of catalysts for the up side but in terms of the down side it's probably the worst. >> biotech bucking the broader down trend. novavax soaring 25% on positive trial results of the company's first ever vaccine to protect against common respiratory viruses. the company showing revenues up 69% in the quarter. look at that move. >> stock's up 24%.

got to give credit to guggenheim who about a week or so ago put these guys on their best ideas list. good for them. traded about seven times normal volume. pushed up to levels we last saw in 2001, beginning of 2002. if you were fortunate enough to be in the stock, and it's not a name i think i've ever uttered on this show, i think you absolutely have to take profits. it's a gift to be up 24% in a name like that. not to say it can't have the next leg higher but the fact we stopped exactly where we topped out 12 or so years ago leads me to believe it's time to take money off the table. >> this is also one of the stocks that has an ebola -- so in the time of the ebola fears that's we are bring it up. >> ah, that's where it sounded familiar. >> but obviously they have other vaccines -- >> it just highlights to me, up 24%, it's also something that could be down. very risky to own unless you feel you have a he very particular edge on how efficient this drug -- effective rather this drug is going to be. that's why i stick with the much

broader ibb, xpi. >> if things get dicier in the markets is biotech the place you want to be in or -- >> no. it's not the place you want to be in. and in fact we talked about the correction definition. the 10%. you could look at the ibb which basically kissed 400, 397 on july 17th i believe it was, is now down to 367. you're in a place where you've got -- this is 8%. are we in correction mode here? clearly as we said a couple days ago i don't think funding for biotech is going to change. the structural call people made on why these things are going higher and where we are demographically in this country and where technology's taking it still -- >> but they trade with a big hope and premium that a utility will give you something different in a correction. >> and in this market, remember, we talked about it over the last couple weeks, that you had a lot of biotech tourists, a lot of generalists getting into this market. so at the first sign of trouble they're going to bail on this. 367, 365, critical levels.

i actually think probably 340 is where ibb ends up. >> i think what a lot of people don't realize as well is biotech's about 22% of health care overall. so health care is a favored sector in this market. >> and seen as defensive. >> and seen as defensive. and yet 20-something percent is biotech. >> because of some of the runs in these huge names. it's moved that way. what happens is the ibb or the etfs move the individual stocks. i think the stories are still intact. i think that's what tim is saying, alluding to. but i think the etf moves the stocks. the etf moves, the stocks go down in sympathy. i still think the celgene story's intact. the gilead quarter was ridiculously strong. as was amgen. yes, there are a lot of names that don't have earnings but those three certainly do. >> google's new corporate structure has some comparing it to berkshire hathaway's. but there is a crucial difference and wheel explain what it is when we come back. you're watching cnbc. we're first in business worldwide. meantime, here's what else is coming up on "fast." >> announcer: china's shocked the world. >> what's that?

>> antidote. >> to what? >> the poison you just drank, dr. jones. >> announcer: but one wall street bigwig who oversees $70 billion says right now is the perfect time to buy. and she'll reveal where she's putting her money to work. plus, "fast" is going west. in search of the best investment opportunities in america. from stocks to real estate to cars, we're headed to the hottest city to find you the hottest trades. "fast" goes west. august 13th and 14th at 5:00 p.m. on cnbc.

google shares rising 4% today after announcing a new corporate structure that has drawn comparisons to warren buffett's berkshire hathaway. but our own josh lipton says that analogy may not be all so accurate. josh. >> well, melissa, it's easy to understand why larry page would like investors to think of alphabet like warren buffett's berkshire hathaway. who wouldn't want to be compared to one of the greatest value investors of all time? and there are similarities. alphabet is a new public company with a portfolio of diverse businesses from calico to nest,

but some do think the berkshire comparison is a bit of a stretch like meyer shields of keith, brew yet & woods. he covers the company. and he points ow that buffett doesn't generally want to build companies from the ground up. and notwithstanding his bet on big blue he avoids tech. the most obvious difference is berkshire is truly diversified by everything from insurance companies to railroads but google is first and foremost an online ad company. that's where it makes all its money. many of those other businesses are those so-called moonshots like driverless cars. still, though, you heard today people with strong opinions about that comparison. even linkedin's jeff weiner weighing in on twitter saying he thought google's new holding company was a lot like a 21st century berkshire hathaway albeit one with a lot of venture bets he said. melissa, back to you. >> josh lipton, thank you so much. >> who thinks google's 4% rise in today's session was worth it?

>> i'm a hedge fund manager, so i'll hedge my answer. but i think it shouldn't have been here before. so brian and i were just talking about this in the break. to the extent the company's been penalized for lack of transparency and you remove some of that obscurity that's better. the losing venture arm will get a lower multiple for losing money than it currently gets within the whole structure. which would i think allow for unlocking value. >> guy. >> july 17th they reported. you had that huge spike. the subsequent move to 674. it retraced that move almost back down to 620. i think it's just where it should have been all along to be honest with you. i can't say the 4% today makes sense but i think if we look

back at that quarter they did everything right for the first time in 18 months. am i surprised by the move today? yes. am i surprised? no. because think it should have stayed here all along. >> what were the reasons you would have bought google before all this news? the valuation was still attractive. karen's been saying p. i've been saying p. total overnegativity. then you have a case where you're seeing the operating margins starting to turn. we got that out the numbers. this was an operating margin that was imploding until this quarter. that's very good news. you lad in the transparency and there's still plenty of room also if you think about this stock an year over year basis it's been underperforming the s&p until that ratchet move. if you look at it s&p's up 8% or 9% year over year. google's up 12 or 13. not really that big an outperformance for a company that was cheap to begin with. i think it can go a lot higher. >> don't forget, not too long ago we were talking about the catalyst of a capital return. >> yes. >> but this wasn't capital return. they changed the name. they -- >> but i'm saying this is a --

and that's next up. >> i was asked here in the commercial, i said $25 billion worth of value created today to me seems absolutely crazy. it's the same company it was yesterday. they haven't done anything different. i understand it's karen's explanation. there's a lot smarter people than b.k. i know that's hard to hear, there are smarter people than b.k. >> come on. >> i would just say a stock that's up 4% in a market like this on something that sounds crazy, you don't fade it. there's something else going on. >> still ahead, the cio of a $60 billion asset management firm says china is already priced in. so what is she buying? she'll reveal. later apple falling more than 5% today. we'll tell you just how much one firm thinks china could impact apple's stock.

welcome back to "fast money." when it comes to the markets, easy come easy go. stocks erasing all of yesterday's big gains today, falling after china's surprise move to devalue its currency. the stock closing lower for the eighth time in nine sessions. down 212 points today. apple tumbles. the wall street darling losing another 5% today. hit on china fears. we'll reveal why one firm just sounded the alarm on the world's most valuable company. and later is mcdonald's undervalued? we've got an inside look at the latest high-tech measures the fast food giant is taking to

keep up with the sizzling competition. but first to the big news out of china. the country's currency taking its biggest hit in more than 20 years today after a supplies move by beijing to devalue the yuan by around 2%. now the measure comes as china's main stock markets continue to trade far below their record highs reached earlier this year. but is the weaker china already priced into the markets? oil and copper both trading near 52-week lows already. and ford and gm which both have heavy china exposure are also down over the past year. rebecca patterson is the krichlt o of bessemer trust, a wealth management firm with $60 billion under management. she joins us on the "fast" line. rebecca, always great to speak with you. >> hey, melissa. >> so you think it's overdone, which implies it sounds like you're going in and buying stuff. >> i absolutely think this is a buying opportunity. not necessarily mainland chinese shares but equities broadly. a 2% move in a currency, okay, fine. they haven't devalued since '94. so it was unexpected. it's a surprise. and it creates uncertainty.

but china has a much bigger game going on and that's getting itself into the international monetary fund currency basket. if it had a large devaluation in the next 6 months, 12 months, it would create political backlash and put that at risk. this is not the beginning of a bigger move in any substantial way. this is a one off, make their currency more market-friendly. and i think people are misreading it and overreacting to it. maybe because they don't want to deal with uncertainty during their august holiday. >> it's karen. if this was sort of a one-off and they're mindful of their currency, was this as big as they thought they could -- was this as big a move as they thought they could sort of get away with? >> i think that's exactly right,

karen. they're trying to stop being the rodney dangerfield of economies. they want respect. and they want the g-7 and the imf to take them as seriously on the geopolitical stage as their economy warrants. it's the second biggest in the world. and they're still not in a lot of these funds the way they'd like. so by taking this step, moving the currency, changing how the currency values every day, it checks the box to get into one of these clubs, is to speak, but it doesn't create a currency war. i was surprised today how many investors out there were saying it's the beginning of a currency war. yes, some asian currencies might react. but i just don't think -- i don't think that's going to be the likely outcome. >> so rebecca, what are you buying on dips? >> again, mainland chinese stocks, even though they're down 25% or so from the june high, i think that is a game for people with a lot of bravery and money

they're willing to throw away. but i do think you saw equities in japan. you saw equities in the euro area, u.s. equities today. companies with good cash flow. with good business models. just everybody took everything off. we're overweight developed markets. europe, japan, and even the u.s. i'd be looking for companies you already like there and taking advantage of a slightly better entry level. i'm still on the way tome engineering markets. yes, i think china's largely priced in but i think they face other headwinds in the form of the fed and higher interest rates. you'll just get better bang for your buck with europe, japan, and the u.s. especially if ugh hedge out our euro and yen. >> great to speak with you. >> thanks. >> rebecca patterson, bessemer. for more on china's historic move our own b.k. make his way over to the smartboard. sashaying, if you will. >> yes. >> what are you taking a look at? >> i'm taking a look at the u.s. dollar-chinese yuan rate.

that's what we have right here. this goes back to 2006 before the last crisis. if you look at it, what happened today, which is right down here, is unremarkable. you wouldn't even notice it on a chart, right? which is what rebecca was just speaking of. however, i'm in the other camp on that. i think this is the beginning of a larger devaluation. now, china wants to get into the imf. if they wanted to get into the imf they would have done this move before this weekend, before the imf said we're not going to let you in. they would start to liberalize this market. the other part of this is what china did. they said they're going to set the rate based on the market. of course that rate will be monitored. but they're going to let the market set the rate. which means they would weaken more. which is why i have the orange line. i know you're wondering why is that orange line up there, b.k.? b.k.'s going to tell you. this is about a 15% devaluation. why is that significant? when you look at china's competitiveness around the world, price competitive, they're about 15% more expensive than they were back here in

2006, back in 2000 and back in 2008 when the fed started this qe program. it would not surprise me at all to see china slowly devalue this currency to about 7.25. which would be about a 15% devaluation. >> based on this analysis, b.k., what are the trades? >> what's going to bent, right? you have u.s. bonds are going to benefit. china's going to have to possibly buy bonds but we're also looking at a deflationary shock here. that's going to bring rates down. things are going to be cheaper for the u.s. consumer. obviously with oil going lower things are going to be cheaper. now, the other part of that that could be good is walmart. a company like walmart might actually do quite well. their input costs are going to be cheaper. that's assuming thk keep their prices where they are. their margins are going to get better. on the other side you're looking at a weakness in commodities. we're already seeing that. you're seeing that a strong dollar, this dollar will most

likely get much stronger. and that's kind of the way you play it here. you're long u.s. consumer type of names, short the oil, short commodity, long the u.s. dollar. >> so what should we do with euro? rebecca likes europe, b.k. does not like europe. >> 11,200 on the dax. i think europe is the best positioned for a weaker commodity except for the bank that's still on the policy easing side. and it's a discount for the s&p. >> you're on the other side of b.k.'s europe trade. >> i'm short europe. >> let's go back to china. let's go back to the poster child for global growth at a certain point was freeport-mcmoran. this was a $60 stock four years ago, traded $12 today. awn precedented more and a stock that's moved considerably lower over the last few years. what's the good news? the good news is the end of 2008, beginning of 2009 it traded at these levels. if you've been looking for an entry point, tim mentioned this might be the trough. well guess what, folks. this is as good as it gets if

you think fcx is undervalued. >> still ahead wall street's love affair with restaurant stocks. we have a very special report on what shake shack's quarter could mean for the broader space. plus apple gets crushed, falling more than 5% on china fears today. could it be the beginning of a much bigger move lower or maybe a buying opportunity? back after this. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

$271 million. u.s. same-store sales, they increased by 4.2%. shares are down. this thing did go public at 20 bucks a share. so we are now, yes, below in the after-hours session the ipo price. back over to you, melissa. >> dom, this is a chain of churrascurias. the all you can eat meat thing. >> yeah. that's the one.

>> i feel like we should go to b.k. in the meat space. >> i am -- while i am a big fan of the meat space and an expert in the meat space, these names scare me a little bit when you have these -- i don't want to call it a fringe name but these names concern me because the only way there are all these quick service restaurants have value is they continue to open shops and continue to open shops and continue to open shops. i don't know if that's going to happen in this case. it seems to me to be a little too nichy to go. there's much better names in the meat space. >> shaving the meat off. >> looks pretty good to me, man. i'm always green, by the way. i'm never red. >> hardly ever red. the popularity of shake shacks has forced other names to roll with the times. mcdonald's has rolled out a new feature called create your taste where customers can order custom burgers at kiosks located in the stores.

the first high-tech mcdonald's opened in new york earlier this month. so we sent our ambassador to give it a try first hand. here's what he found. >> outside the newly renovated mcdonald's at 58th street in new york to try the new create your taste kiosk. let's head inside and see what it's all about. >> hello, sir. welcome to mcdonald's. >> how are you? >> i'm good. how are you? >> fantastic. >> okay. i want to create my own taste. >> sure. let the magic begin. >> we're going 1/3 sirloin burger, 100% beef. there it is. ooh. ciabatta roll. cheese. let's go pepper jack. grilled mushrooms for sure. maybe some grilled onions. we'll get some lettuce, some tomato. got to have some pickles. just like me at the smartboard. let's go with the creamy garlic. barbecue. >> is that correct? >> that's a good-looking burger right there. >> the server will bring it to you. thank you. ♪

>> let's give this thing a try. i have built a masterpiece at mcdonald's. ♪ >> this is not your father's mcdonald's burger anymore. >> not your father's mcdonald's burger. is that really saying a lot, tim? >> i do think this is a game changer for these guys. and here's why. first of all, for people that are worried about mcdonald's margins the people having a little more money are going to these kiosks and buying a meal that costs ten bucks. my meal was like $10.50. and by the way, those are the people more inclined to go toward the technology. to the extent they're taking selected locations in selected cities and saying we're creating a buzz, we're creating momentum, i think it's absolutely hitting it. and i think these are guys that are getting the chains, they're starting to think almost a startup and i think that's very important. >> but can they get that $10 burger buying guy or gal who might be going to shake shack instead, getting them in the

door? >> getting them in the door. this place is renovated, looks unlike any of the other mcdonald's. it doesn't look like a homeless shelter. it looks like a very nice place. and i'll say that the people that were walking in there, and you can tell the difference, there were suits, upies and guys like me. the only guy in a suit on a 95 degree day in manhattan booth. that was tough. i think it's a game changer. you guys know i'm bullish on the stock. i think the momentum is changing. a little bit of momentum change in mcdonald's has a big impact on that stock price. >> okay. before we proceed with this discussion, with new innovations like create your taste and craft burgers, is mcdonald's currently undervalued? consider this. mcdonald's currently trades at around 21 times forward earnings. that's far lower than wendy's at 30 times, chipotle at 43 times, and check this out. shake shack, a whopping 327 times forward earnings. >> is that rhetorical? >> for more context krispy kreme had its highest ever valuation back in 2006 when it was trading at 898 times earnings.

>> well, the argument is mcdonald's can't grow that much more. they're so, you know, saturated and -- it just tells me. 898. so if you're at 449 you could double. >> that's the point, right? which would you rather? i mean, if you look at -- if you look at krispy kreme that was a great trade for a while. you got crushed if you held on to it too long. but if you look at something like shake shack, once you get that momentum earnings don't matter. as long as people are buying it it's going to go higher. it's a trade. it's a momentum trade. >> i don't think the knock on mcdonald's has ever been valuation. i think the knock on mcdonald's is the fact that people are migrating away. i don't know if that's a game changer. i'll be honest with you. if i'm going to cafe mac i'm getting a couple cheeseburgerars and a quarter pounder. that's my thing. >> i don't want to touch that

germy touch screen everyone stuchg. >> go wash your hands. everything in any fast food restaurant is dirty. that's ridiculous, by the way. i get what guy's staying. healthier choices and a very different menu. i built a very nice burger. >> good work, tim. >> after the break how will china impact alibaba earnings? the stock hitting its lowest level ever today ahead of tomorrow's report. we've got a top analyst to explain how to profit on alibaba's report in your "fast money" earnings edge. plus the fear gauge surging today. we'll tell you just how much higher some traders bet the vix will rise later this month. you're watching cnbc, first in business worldwide. ah!

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you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. apple sinking more than 5% on china fears today in what was a major buzz kill. analysts at jefferies cutting their price target on the stock to 130 bucks from 135 due to demand uncertainty for the iphone in china in addition to the incremental loss of investor confidence in apple's ability to

grow. we've been talking about china concerns creeping into the apple story for some time. a lost analysts have stuck to the story it doesn't matter, even if they don't have much china growth they've still got growth elsewhere. >> well, maybe, but i'm not so sure. i think the story in apple is crumbling a little bit. let's just say china's off the table. china's going to go the way it's going to go. last week verizon changed the way they're doing their subsidies. you're no longer going to be able to get a two-year contract with a subsidy. you have to go to that monthly payment plan. to me that's the first sign that the carriers are moving awiay from subsidies, which is a huge risk for apple. that part of the story started to crumble. now we know the smartphone market is well saturated. and their watch sales aren't going well. how are they going to make money? absolutely. are they going to make the kind of money they used to? probably not. for me apple is a take profit. i'd be absolutely take profit. >> people have been taking profits. >> if you owned it from 30 on, if you're one of these people that held it for the last five years, the story is changing

dramatically. >> i would just say that i think people are responding to the china news but also people have to somewhere look at the valuation at this level ex cash, 13 times, and this is a company that's far from broken. >> there are a lot of people that say i own it, i get that. if they broke 120, we have a chance to see 105, which is the levels we took off from in january. you do a round turn this year i don't think it's that crazy to say. with that said there are people, jim cramer's one of them that said just on a stock don't trade it. which is fine. if you're going to trade it you get an enfriday point at 105. >> i think people start to look at september, the 7th or 9th -- the 9th. i think they'll start to look to that as potentially a vix catalyst for apple. >> investors hoping alibaba doesn't end up as a buzz kill. when it reports earnings tomorrow before the stock market opens. the stock sliding 4% today hitting an all-time low. we caught up with wedbush management's gil lawyeria to find out the top things he'll be

watching in tomorrow's earnings report. take a listen. >> i'm gil luria for wedbush and this is your "fast money" earnings edge. alibaba reports tomorrow. three things to look for beyond revenue and earnings. one, t-mall gross mchds volume. two. take rate has to be higher than 2.2%. three is the commentary on the impact of the chinese economy and stock market. those words will be parsed even more finely. we expect alibaba to do well and the stock to outperform after they report. for "fast money" i'm gil luria. >> chinese stocks aren't so hot right now. >> let's face it. although the chinese market was down very small today on a day when people aare accusing -- >> but the chinese internet stocks. >> right. and i've got the macro concerns -- i'm not sure what they're going to tell you about the macro. i think if you look at the sales channels and what these guys are doing to overcome some of their regulatory concerns and told

overcome the concerns they're not doing enough to fight counterfeit and fraud on their side is getting better and better. i think it's going to be a longer process but the valuation is at your back. 76 on the charts to me where we traded down to today. until it gives ground. >> what else is held potentially is yahoo! at $35. if alibaba comes out and says anything remotely positive you get a spike. i think you can trade yahoo! from the long side against 35, which was effectively the low today and the low vol 2014. >> be sure to tune in to "squawk on the street" tomorrow 9:00 eastern time. alibaba ceo daniel zhang will be live for a first on cnbc interview. you don't want to miss that. today's sell-off sent a chill through the market as the vix spiked more than 12% and the traders are betting on even more pain to come. brian sullivan has today's "options action." hey, brian. >> hey, melissa how are you doing? the vix was hot and that was a hot topic on the floor. certainly traders stepped in. bought 20,000 august 18/20 call

spreads and then paid another 9,000 for 8 to 10 cents here. basically, the trader risking one to make 19. if the vix trades above 20. that's a huge bet that the vix trades to the up side. the 19/1 payout is a huge payout, but obviously so you're risking a little bit to make a lot. and basically i think traders here on the floor are starting to get concerned about where this market is headed. we've been in such a tight range, melissa, between this 2070 level and 2100. a little bit higher than that on the s&p 500. if we get a break below 27, i said this earlier today, the future trades 2068, i think we get some volatility and you get that spike to 20 in the vix. >> thanks a lot, brian sutland joining us from chicago. for more "options action" check out the full show 5:30 p.m. eastern time on fridays. meantime, coming up on "mad money" tonight cramer's got a pair of exclusives. the ceo of etf player wisdom tree which is up more than 60% this year. then the head of charles river labs and how it's helping biotechs develop game-changing

drugs. plus cramer's taking a deep dive into the chaos in crude in china's currency devaluation. all that and much more next on "mad money." up next our traders lay out what they're watching ahead of tomorrow's open. much more "fast money" straight ahead. why should over two hundred years of news out of china sent shock waves through your stocks but what do you do with your money right now? there's one thing you'll need to be watching that will clue you in about it. plus charles river and wisdom tree. "mad money" is next! for more than two centuries we've helped progress makers turn their ideas into reality. and the next great idea could be yours.

time now for the final trade. tonight we're going around the horn to find out what everyone is watching ahead of tomorrow's open. tim. >> i'm watching media stocks. after the plunge we had last week i'm seeing a lot of these guys they bounced nicely but how much can they hold on to that? i own lionsgate which is doing a very good job but i think i want to take some profits here and this is how i'm playing this out. i think media stocks probably weaken up again, test the lows. >> beakers. >> i'm watching eem tomorrow. we've talked about this a lot. eem at the $36 level. that's a support level that's actually going back all the way to 2010 and actually even can go back a bit more. that had a really interesting reversal to the up side today. i'm not a buyer of eem. you see dollar strength you want to short this through 36. >> we've got a special guest here tonight. the chairwoman's daughter lucy. so lucy, what are you watching? >> i'll be watching macy's tomorrow to see if they mention the restructure. and as it turns out, so will my

mom. >> yay. guy. >> outstanding. robert in oklahoma city, right on. they're watching the show. i'm watching commodities. is crude, is this the capitulation in crude oil? i don't think so. that's what i'm watching. >> i'm melissa lee. thanks my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you money. my job is to not just entertain but put it in context and explain and teach. call me or tweet me @jimcramer. does anyone remember yesterday? yesterday when oil went higher, the miners ll