joining me today. have a great long weekend. kayla, a great trip as well. that does it for us on "closing bell." "fast money" begins with melissa lee and the whole gang and a lot of discussion about apple too. that's all coming up in just a few seconds. again, have a great weekend, everybody. we'll see you right back here on tuesday. "fast money" starts right now. live from the nasdaq marketsite overlooking new york city's times square i'm melissa lee. traders on the desk are steve grasso, david seaburg, brian kelly and guy adami. the surprising sector that could rally if the fed hikes rates. ceo tim cook in the spotlight next week for apple's big event. one analyst says he's about to do something he promised he'd never do. we'll explain this later this hour. but we start off with our top story tonight, that is the stock market getting slammed again. the dow and s&p closing back in correction territory. the dow losing about 270 points. all three indices down about 3% for the week. if we are to take solace, though, in today's action, guy adami, it would be that we finish well off of our session lows. >> what, about ten s&p handles or so. at one point we traded back up

to 1930. that is, i guess, a good thing if you want to play that game. i don't think it means all that much. i will say this, though. steve grasso's levels have held up. he'll talk about them in a bit. 1970 has been a bit of a pivot point. yeah, we traded through it. but you saw what happened when we traded back through it on the down side. today's job numbers very interesting. if you just look at the unemployment rate, that's what the fed looks at, right? 5.1%. everything seems to be in terms of what they're looking for, right at their goalposts, right at their goal line. yet you're in an environment where interest rates continue to go down. again, very concerning to me. i think it means deflationary pressures. i think there will be more pressure on the stock market. 1820 in the s&p to me is right in the crosshairs. >> i actually think the interesting thing over the last two days and particularly today is europe. i mean, look at what happened. the ecb came out, they said we're going to do more quantitative easing or open the door for that. and that worked for about a day. and the dax just fell off a cliff. the u.s. fell behind it.

and to me that's a signal that people are -- investors are starting to lose confidence in the ability of a central bank to keep asset prices up. in the big picture you have to understand what's going on. there's a global deleveraging going on. so if the fed gets any closer to raising rates, that means people are going to deleverage even more. that puts pressure on europe. that puts pressure on china. and the whole cycle continues again. >> and deleverage of course equals derisking. we saw that across the board. every sect got hit pretty hard, pretty equally. the xlf, financials stood out, david. if you take a look at the declines from the most recent highs, morgan stanley almost 19% declines from its recent highs. for goldman sachs down about 17% from its recent highs as well. >> no doubt. and there's been a lot of concern about whether or not there needs to be a reset from the standpoint of earnings. and i think you may see that going forward. and if you do, obviously, these earnings continue to take it on the chin. i look at the financials and say in an environment where the yield curve is actually flattening the financials may not be the place you want to put your money. you may look at it and say to

yourself you can find much better value in other sectors that could outperform in a market where we're in a rising rate environment. >> i don't think there could have been a good number. we all talked about it. every show on this network talked about. what was the number you were hoping for? what was a good number for the fed to see this morning? and to guy's point, i'm not sure they could have threaded that needle no matter what happened. >> yeah. >> the market was going to absorb it as there is no growth, china's slowing, there's going to be a global recession that is contagious to us because everyone kept saying who cares about china? we're talking about america's market. it doesn't matter. we're not in a bubble. we don't stay in that bubble. >> you know, i totally agree. i think one thing to keep in mind here is volumes today were extremely light. people again still on vacation. i hate to say that and say that's a defensive scenario and you should be buying stocks because of that. but i would say if that was -- >> you know who was on vacation? sorry to cut you off because you cut me off. sorry. china was on vacation. >> you're right. but i say this. if it was a really hot number, and i question you this, really

hot number, would that have changed investors' philosophy today? would that have changed the mindset? no confusion. they're definitely going to move. >> i think if they move the problem i've been saying is risk of an inverted yield curve. you don't have that long end. you don't have that 350 basis points to play around with. you have actually less than that. and historically the fed raises in the face of better growth, inflation, and a bigger spread. >> i want to talk about individual stocks and sectors. taking a look at netflix once again today, guy, taking a look at that basket known as fang stocks, it is once again an underperformer and netflix is down -- it's well into bear market territory. >> below $100. tim seymour great call earlier this week when it was about 115, 116. he said if you believe that things are going to sort of get softer, the name to fade was netflix. he was spot on. he actually got close to 120. here we are below 100. we had mark cuban on a few weeks ago. they sort of meld together. but on that day the stock closed around $95. 95 to me continues to be the

line in the sand. it's about a 50% retracement of a couple levels we have mentioned. i do think it holds. i think the story is intact. i don't necessarily think the broader market is intact. >> okay. well, the last time the fed did raise rates, one surprising sector actually rallied pretty hard. this is surprising. steve, what are you looking at? >> i will tell you what's counterintuitive, that's going to be the word of the day. because if you look at this bar chart that i have right here, if i would have told you this a week ago you would have said i was crazy. utilities have rallied 27%. the year that the fed started to enter into a raising rate cycle. what else? energy. i understand energy because you figure growth is important. you figure the economies are getting going. but what's more important is if you look at this, that's against the backdrop of the s&p being up 11%. that's important. you have here 2 1/2 times what the s&p did. you have three times what the s&p did in energy names. so just to broaden this out a little bit, let's just look at the whole cycle.

from 2004 all the way to 2006 this is the fed funds rate in blue. this is utilities right here. all the way up. it tracked it. step for step. you wouldn't have bet on that a couple of weeks ago, couple of months ago. utilities are your safety bet under the radar. >> you've got to wonder what the performance of utilities were going into this, if there was some anticipatory sell-off because of that. did you look at that, grass? >> i did, and there wasn't. but what i will tell you is what's more important is if i were to have asked you this question yesterday, months ago or whatever you would have said financials would have performed the best. what i did see was that. i saw a run-up in financials prior to 2004. and that's why they underperformed in the rate rising cycle. >> grasso did his homework. >> he did. >> would you be a buyer of utilities on the notion that -- >> i would not. >> you would not. >> no. because that makes sense intuitively in the sense that this is what dave was just talking about, they were raising rates into a strong economy. so as long as utilities' earnings are rising faster than their cost of capital, then that's going to be fine.

in this particular case now i don't think you're going to have utilities' earnings rising faster than cost of capital. so i think it's a different situation. >> i 100% agree with you. i think that's a very good point you brought up about earnings rising faster. just like the reits. if you look at the reits during that same time frame, they actually outperformed as well. and the reason why is rents were moving faster than rates were moving higher. look at it from that perspective and look at the reits, we're in an environment right now where if you start to see a move in rates, rents are significantly ramping. i think the reits could actually perform well. >> just to answer b.k.'s point, the reason why they outperform is they've been stuck in a 0% rate environment that they've been able to be cash rich and they pass along their expenses to the customer if the economy grows. >> all right. so you're in southern still, grasso? >> no. i'm actually going to get back in. i'm a little bit nervous about buying energy, but i think i'm going to -- based on this analysis that i just did, utilities and energy, i think i'm going to get back in. >> interesting.

coming up in case you didn't know, it's force friday. but will all the "star wars" hype turn disney ceo bob iger into a jedi knight or more of a darth vader? that trades after the break. plus could a chubby chipotle ad campaign mean slimmer sales for the burrito giant? a non-profit ad campaign has the fast food giant in its crosshairs. we'll tell you what it could mean for the stock. and later apple's big event next week. one analyst says tim cook might be ready to do something steve jobs said he would never do. we'll tell you what that is later this hour. much more "fast money" still ahead. ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop,

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welcome back to "fast money." chipotle feeling the heat today and that kicks off our top trades. a lobbying group took to the "new york post" with a full-page ad claiming that eating chipotle twice a week will lead to an extra weight gain of 40 pounds a year. but if the food isn't healthy, is the stock? it's up about 6% so far this year. beakers. >> that ad is not healthy for anybody. that's not going to be good for anything. i would just say -- here's how i would look at it, is you need to make sure that chipotle's a dynamic company, which they are, with a dynamic management. take a look at it as opposed to something like coca-cola, who missed the whole health trend and the energy drink and all the juicing going on right now. chipotle i think can get through

this because of their management team, because of execution. i wouldn't buy or sell chipotle on this. i'll go with these prices in this market, i would be very concerned about owning a lot of chipotle. >> or eating a lot of chipotle. >> can't eat a lot of it and i wouldn't want to own a lot of it. >> by the way, that guy in the ad is about 100 pounds overweight, not just 40 pounds overweight. but in terms of chipotle versus the rest of the sector. >> chipotle's performed worse than the rest of the sector. they're facing some tough comps but i think they're going to perform -- they should do okay. look, i don't think this ad means anything as far as the way to invest in this company. i think chipotle is a solid company. it's something i'd be buying here. i don't think it's going to take off to the moon but i think you get a long-term growth story. >> first of all, i don't think i look that bad. number one. number two, i go to my old horse. and maybe you can guess it. can you guess it? domino's pizza. >> there you go. >> up 10% year to date. i will tell you, chipotle's

chart looks a hell of a lot better than domino's. domino's does have to hold on to its 200-day, which is right around 104. >> next up, force friday finally here as the disney marketing blitz for all the "star wars" merchandise launches. with 116 days to go until the "star wars" movie premiere are all the gains priced into disney's stock and how about the toy companies, targets of the world, et cetera? >> being that i have never seen any of the "star wars" trilli -- >> i know. >> what's the next one after tril? >> if there's a prequel -- >> so i won't be seeing them anytime soon. i'm the wrong person to ask. with that said, all the "star wars" stuff is absolutely -- we've known about this forever. what's not priced into the stock, though, is i think the belief that bob iger will figure this out. the stock's off even with the move back up off 100. it's down some 22% over the last couple weeks. i think the valuation is reasonable. i think bob iger will figure it out. yes, i understand the problems they're having on the cable side of things.

but i also think he's one of the best managers out there. you've got to give them the benefit of the doubt. if the market stabilizes it goes to 110. >> was the valuation reasonable when the stock was sitting at all-time highs of 122? i ask that because that would clear the way. if you thought that was reasonable that would theoretically clear the way to that level again. >> price is truth. guy likes to say that a lot. i do believe it's going to work its way back up. i do believe they're the king of content. and i am personally long disney. but i also believe that this is what's going to save netflix too. netflix deal with disney kicks on in 2016. so they're going to get "star wars." they're going to get marvel. superheroes. there's a lot of content that's going to save both stocks. >> if the market gets stronger i think disney's a place you do look to buy. lock at the way it's trading. 100 is your stop. you can get it up to 115. that's the gap. you have something like a 1 to 15 risk-reward ratio, which is fantastic. disney's where you look when the market starts to rip. >> next up facebook-owned what's

aup reaching a milestone, 900 million monthly active users, adding 100 million users in the mast six months. julia boorstin in l.a. >> that's right. what's app's user growth has been exclusive -- explosive. it's really been amazing, melissa. it's grown 50% over the past 12 months. it is the most popular messaging app worldwide. it allows users to send text and voice messages. and in just the past few months it's rolled out voice calling as well. the app is free to donald. it's also free to use for the first year. then it costs 99 cents per year. what does this mean for facebook? the social giant won't reveal how many people are paying to use what's app, and it doesn't break out revenue from what's app, but the longer people use it the more money facebook will make from it. analysts expect facebook to find various different ways to monetize the service. it can charge its users more. it can enable brands to pay to reach people and message people on the platform. they can even sell stuff to

people on the platform. and what's app has said it's opposed to advertising but we'll have to see if that changes. obviously, facebook is an advertising giant. now, facebook's acquisition of what's app for $22 billion is certainly justified by what's app's massive growth and massive scale. that $22 billion acquisition last year was a record in silicon valley. and of course what's app stands in sharp contrast to twitter. it has just 300 million active users and it's not growing at all. so we can expect plenty more questions for facebook's management coming up about how it plans to turn all the what's app popularity into profits. melissa? >> thanks a lot, julia boorstin. that's obviously an important part of the facebook story as we are looking at facebook down about 11% or so from its most recent highs. >> facebook's a great story. it's a growth story. i pick up my cell phone and look at the free downloads and see where they stand all the time. within the top ten -- their four

downloads are in the top ten consistently. facebook is a great stock here. it's a cheap valuation. i think it's a great long-term buy. >> i recall the night the what's app deal happened. it was on this show -- >> nobody knew what what's app was at that moment except dan nathan. >> the great dan nathan, who will be on "options action" -- >> you just made his year. >> i'll say this. that's proven to be a pretty prescient acquisition. i think the stock goes higher. this tape stays where it is right now, this should be a $100 stock. >> this one is right at its 100-day. i'm not going to say it's hugging it, but $86 is supporting facebook. it's got to hold that level. up 13% or so year to date. it's performed well. >> it's okay. i prefer to go to other places. >> like what in that space? >> i'm not really in that space. maybe google of all of those. here's -- i think you've got to give zuckerberg credit for being able to see these things have

multiple different revenue streams. it's similar to google. i think i like google just a little bit better because they have more levers to pull. >> all right. coming up next, top apple analyst colin gillis, that man right there, says the company could be about to do something shocking at next week's event that no one is talking about. he'll explain right after the break. you're watching cnbc, first in business worldwide. in the meantime, here's what's coming up. >> announcer: which one of these three stocks are traders betting will soon see new lows? the answer might just surprise you. plus -- >> i'm so hungry i could eat a sandwich from a gas station. >> you might be able to do better than that. because the decline in gas prices is setting up for a delicious trade. and we'll tell you what it is. later in the hour. because they're getting comcast business internet. comcast business offers convenient installation appointments that work around your schedule. and it takes- done. - about an hour. get reliable internet that's up to five times faster than dsl from the phone company. call 800-501-6000 to switch today.

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and you can eat even tough food. fixodent. strong more like natural teeth. fixodent and forget it. data about our users. >> or apple could go even further and start driving dynamic ads. this is the area where television is very ripe to be disrupted. if we think about how targeted are tv ads, they're not targeted. and particularly as people -- you know, the relevancy could be greatly improved. and as people continue to watch tv in a non-linear manner, which means watching off their dvrs, the targetability goes down even more and apple could change all of that but it would have to change its promise. >> some would argue it's a very different era, that people expect not to have that sort of privacy anymore. whereas when steve jobs made that promise it was a different

era where people weren't, you know, giving up that privacy for access to -- >> you know, they say hey, it's anonymous data, right? you don't lose any privacy. your identity's already removed. they're only sharing what you watch and when you watch it. but it's a slippery slope. and apple's brand is tied around notion -- >> in your view is that negative for the stock, even at margins? >> let's see the product obviously. let's get the product announced and see what happens there. it could be a tremendous revenue stream. but if it's not held right it could hurt their brand because they're known for protecting user privacy. >> colin, great to see you. colin gillis, bgc financials. >> happy friday. >> happy friday to you. what do you think? >> if your bull thesis for apple was china growth then you can't discount the collapse of china when it doesn't work for your dogma. that said, 103.5 held a couple times. i think you trade it from the long side against that. >> i said it before on this show. i think it's dead money near term. we need to see the sell thru and

see how the iphone actually sells. we've been questioning builds. we'll see. >> i think iphone surprises, i said it last night, i think a bunch of things surprised. car plays -- >> you want to own it now? >> i do own it. and i think it's going to pop here. i'm going for a 120 base. that's about 10% higher from here. >> beaks. >> i don't know. it's fine. >> really? not one thing tonight where you were enthusiastic. >> i'm not very enthusiastic about buying equities in general. so that's where my head's at, i guess. in apple let's just say they happen to break their promise with their customer and they can generate this new user, this new revenue stream, i don't think wall street's going to care about breaking that promise. i think people are going to buy the stock. so in six months from now if this is actually the case you buy the stock. >> time for the final trade. around the horn. steve grasso. >> we're going to get a couple of shots at china to reopen getting back and online. i'm curious to see what happens to those markets. i'm looking at those on sunday night and on monday. >> david seaburg. >> it's all about the fed to me. i know the blackout period starts on the 8th. i'd like to see some cues whether or not they're going to

leak out whether the fed's going to move in september. very key for mee. >> beakers. >> this is becoming bigger than china. i'm watching the yen. that's a big predictor of qur stocks are going. >> guy. >> we've had some unbelievable pages on the show. almost nine years. one of the -- if not the best. jin feng, last day today. she starts on the "today" show tuesday. blackstone, by the way. watch it. green today. very interesting. >> jean belongs in the pantheon of pages we've had on "fast money." >> i'll be hosting the "today" show tuesday. >> that does it for us on "fast money." see you back here tuesday at 5:00. but don't move yet. "options action" starts right after this break. stay tuned. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't.

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we are live at the nasdaq marketsite and look who's joining us this half hour. guy. welcome to the desk. >> this is my second go-round. >> we've also got dan and mike. could be a crazy show. while they're getting ready, here's what's coming up. >> i can't take it! >> you're not alone. but we've got a way to protect

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