great stuff. "fast money" coming up. thanks to mike and carol for a rowdy show this afternoon. melissa lee what is on top. >> ralph lauren got a big pop on news of the ceo stepping down. so what other stocks could drop down. the traders are handing out their pink slips. "fast money" starts right now. i'm melissa lee. the traders are pete najarian, david, dan and guy adami. a good thing for tech stocks and we'll explain. and twitter close to making jack dorsey kae but the board that is in need of change. bob tech will be here to name nam names. and the top story, the third quarter in the books. a rough quarter as the major indices all rally. down 7%. the question tonight is simple. what are you doing for the fourth quarter. guy adami, what do you say. >> two names stick out like a

sore thumb. facebook and goldman sachs. and goldman sachs reports on october 15th. that stock has been bludgeoned with the rest of the financials. i can tell you kata gorive lick i think they'll report a record quarter and the stock will trade in kind. and the sell youft has been so much that goldman sachs i think will rally off the quarter. and facebook to me has held in relatively well. i know it sold off yesterday. got it all back toad. when facebook reports on the 27th they'll too have a record quarter and see the stock north of $100. >> financials are having a hard time lately. and you would think goldman sachs would benefit from the volatility in trading across assets. >> that is the play in goldman sachs. we saw jeffries had horrendous trading and everybody is thinking that goldman sachs is much better at it than anybody else and they'll benefit from that. we'll see. it is something to look at into

the fourth quarter. look at what hasn't worked in the last quarter that may work going forward. >> look, first of all, don't let dan nathan here talk about facebook. those bear claws. >> they are salty. >> i stick with the ibbs and the biotech index. we upgraded a stock today called met ovation. it has been cut in half. valuations in some of the names have been beat up to the point where you're going to see the rest of the street i think come in and we saw a couple today, upgrade names and purely on an evaluation basis. and i think the fourth quarter, the names will continue to run, especially the high qualityerners. i would focus on the am gen, celgene and the bio gen of the world. >> i've seen the gains wiped out for the year. i'm gun shy. i'm going to wait on that. what do you think. >> i like those names. i'm right there with you. but i think going into the fourth quarter, i still think

before the end of the year we might see our rates actually rise. i do. i think the fed will finally step up and move the rates, just a ril -- little bit. but that works right for the banks. scott mentioned goldman sachs. i think jp morgan chase and all of those move to the upside on this and it is a huge catalyst going forward and will spur job growth. i think there are all kinds of reasons why if the fed makes a move, the banks will move to the upside. >> that is sold to you. >> sold to anybody. >> can i get this straight. you don't like any of the banks. do you like facebook? >> no. >> do you like guy? >> you know what i do like, actually? >> you don't like anything. >> no, i don't like it. >> what does b.k. like? >> b.k. likes the energy sector. so take a look at oil. it traded sideways for about a

month. this is despite bear issues in. you saw it up today. potentially on geopolitics and peel think there is a fall in protection. look at exxon-mobil, gone sideways. $72 forming that base. i generally don't like to trade counter trend but going into q4 you could get a pop out of here which would be a 15% rise which b.k. will take every day, buy it, twice on sundays. >> i agree. i think you get a leg into them now and it will take more time to flush out. this is more of a first quarter next year play as far as jumping into energy. i think there is a big value and opportunity to make good money and it is coming up fast so you have to be there. >> so in a modest economy, you get to the final fourth quarter and we see a bump to the upside. why wouldn't they agree? >> i don't agree with the modest economy. even if the fed raises about a quarter point that is not enough for financials to make any

money. >> but last quarter we got great reports. guy was talking about goldman sachs. we had solid reports from all of the financials and the pullback came as the markets are turning to the down side. >> important to distinguish between the financials, the regionals. >> i'm not on the regionals. >> but like a goldman sachs that will benefit. but that is a different story in my view. a quarter point, yeah, could it help securities lending business but they make more money off the volatility. when i say financials, i'm talking about your regional banks, the ones that need a steep yield curve and we won't get one at all. >> we're going to give b.k. a rest now. and speaking of the market, nasdaq turning into a death cross. that sounds scary right. what our next guest says fare now. tech ross is at the smart board with a break down of this ominous term. when i hear death in any term, rich, i think it is a bad thing. >> it is not a good thing.

i think we can all agree on that. but the death cross over the past five years has only proved fatal for those who have sold upon it. let's go to charts and i'll show you why. first you can see the last time we had the death cross, back here in 2012. it quickly reversed itself and marked the low and one of the great buying opportunities in the ndx with the index rallying 75%. and of course you do see the cross in here. now when we zoom in, admittedly, not all rainbows and unicorns for the ndx. and the rally failed, and you see that is the resistance at 2900 day. but we broke into a new low or tested the low like the s&p at 1867. so nice relative strength. key support at the 4,000 level. that is the stop if you are long and i am long. so i think we get a retest of the key resistance up at the 200 day. and now one last chart here. 2010, 2011, two more death

crosses at the tail end of 16% declines. neither one of which worked and quickly reversed. you might get a quick trade out of it. but this is not an indicator you want to be a seller of. i'm a buyer. keep in mind, semis and biotech two great ways to play it. the top performers today in terms of stocks. only a few at the same level we saw at the 2011 low. biotech, 400 above the 200 day, that is the lowest level since 2009 i'm a buyer of biotech and semis and if you like that home you are half-way home for the ndx. that is a play for the fourth quarter playbook. >> rich, thank you for your time. rish ross. >> he crushed it. he's taken over for carter worth. sorry, carter, i know you're watching. >> wow! >> there is room for everybody on "fast money." >> big time. >> any way, he is a buyer of biotech and semiconductors.

those are hard trades. >> let's talk about semis. and intel traded well yesterday. but let's talk about biotech. we talked about 285 being the level. it bounced off of that level yesterday. tim seymour flagged that level. that said, at least you have something to trade on the long side and quickly when i think of death, what i do think of, death valley, clemson right there. >> big game this weekend with notre dame. that is huge. death valley. >> intel has been trading well. >> it has been trading well. and a little bit of a pickup in the semis. i feel like it might be early. i don't know whether they are ready to explode to the upside and you know i'm a bull in that particular sector. but on the ibb, i look at the big cap names, am gen, gilead, cell gen and when you look at where they are now and when you have strong earnings, great balance sheet and a pipeline, i think those names go higher. >> coming up, amazon taking a

page out of uber book and promising on demand delivery but will it fall flat. and jack dorsey may be named the ceo. and model x misses the spot. the stock failed to rally so what are investors missing. a top analyst weighs in. much more "fast money" still ahead.

welcome back to "fast money." we have some news on glenn corp. kate kelly is on the fast line with more. kate? >> hey there, melissa n. a meeting today this afternoon in london, with credit investors in glenn corp, officials from that company sought to assuage ongoing fears in the company. shares were up on monday but there was a huge route and unfounded rumors about a liquidity issue. the officials from the company toast investors they have $50 billion worth of access to letter ever credit financing, a special sort of financing that backs cargoes in transit as part of glenn corp's trading business, the buying and selling

of oil and other commodities. they also said if they were downgraded to junk status, something people widely fear and they are trying to ward off. even if that were to happen, the key portion of the evolving credit bank financing would only be minimally effective in terms of the interest rate so this added up to some reassurance for credit investors and that is another explanation as why we saw a stock rally today in london. >> at the same time, they may not be officially rated junk, but the debt due at the end of 2016, that is essentially trading at junk levels, correct. it is yielding something like 13% for the debt which is due at the end of 2016? >> right. and the further you go out, the duration curve in terms of the corporate bonds sh the lower par value you get which would be investor concerns about their longevity. they know they need other news,

a pay down of the debt and they are in the midst of asset sales right now and they told investors today that at the upcoming board meeting they'll talk about production at the end of the year and more details than in the past. they need to give hard facts to the market place and i think they're aware of that but based on what i heard today provided some reassurance in terms of new facts in terms of nature of financing and where they are at right now. >> kate kelly, on the fast line with news on glenn corp. this company seems like it is in emergency mode right now with the number of times it had to come out and talk about the financing and liquidity. >> yeah. it reminds you similar to a run on the bank where people stop believing and they pull all of the credit lines. glenn corp is big enough where they will get the financing but bigger picture i would expect to see more of this in the commodities space. maybe they get out of this but we'll see more of this. ult ma thely that -- ultimately

that is good when you get the flush-out but we still have the pain to go through. >> and tonight, amazon will hire uber like flex drivers to support the delivery services as pe expand from two-day shaping to one and for prime and prime fresh memberships. steve, you are a big bull on amazon. what zw this do for them? >> it supports the product that will infringe and take away from walmart and target. and they have roughly 20,000 skus right now. and if you pay $7.99 a month and if it is more than that, you pay more. and they are going after the bigger behemoth, i think it is growing opportunity for them. >> it is cut margins. i love the aggressiveness of bezos andez impressed me time and time again when they showed what they can do in terms of

earnings, they can produce. but you wonder, he has raiser thin margins. >> how do you feed the market environment in which to knowingly cut your own -- >> you look at amazon and say this company got beat up for having razor thin margins and they fixed that and gone through that transition. this may impede on margins over the new york term but this is a long-term gain for them and something you have to look at and say they are taking the right steps to gain market share away from other bigger companies. >> next up, after a 30 months, good news for apple watch sales and the average watch sells for $529 with all of the accessories and that is the top end of estimates. gee? >> it is a good thing. and it is still close to the phone and they are crushing it on that end. and so let's talk about the price of apple. yesterday it underperformed and a lousy tape and we discussed why that was. and today it underperformed with a good tape.

and people are still sort of skeptical about the broader market and peeling off things that have held in relatively well. that is the bad news. the good news is if this tape does turn and if you are a believer in the broader market, the same people that peeled back out of apple will have to peel back in at year end. so stay long on the stock against 103.5 and that has been the level for quite sometime. >> and i thought today was decent because it looked like it was going to give up the ghost -- >> decent but not great. given today's tape, i didn't think it was a fantastic move. >> coming up. twitter settling on a new ceo but it is the board that they are worried about and using twitter feeds against them. bob is here to skplan right after the break. you're watching "fast money." here is what is coming up on fast. >> x, marks the spot. >> but not when it comes to tesla whose debut of model x was

a hit but shares fail to rally hard. a top analyst will explain what investors are missing. plus -- tom lee. who said the market is missing a major buying opportunity and he'll explain what it is when "fast money" returns.

welcome back to "fast money." reports say twitter is finally focusing in on jack dorsey as the permanent ceo. but our next guest thinks this should look at the board. bob peck is here on set. bob, great to have you here. >> thanks for having me. >> you did believe that jack dorsey would be the permanent ceo and you're like i said this already. i want to get to the board in a minute. with dorsey, he's been involved with twitter for a long time now and for a smaller amount of time as interim ceo. >> right. >> he could have done a lot more things, right? >> uh-huh. >> so do we have a sense of what he may not end up doing because he's already been there essentially? >> there is a couple of things. we backed jack, because we think he has the executive support. we think that for the employees, he's a rallying point and they rally around him. externally, we saw publicly shareholders come out and

support jack. and he has support by the industry. so we like all three of the factions support him. and what i think is interesting since he's taken over since july, you've already seen his fingerprints on the company. faster roll out. and universal links the other day. the buy button today and the project lightning coming. and you see this tempo increase underneath him and they need to grow the user base and the monetization. >> so you like dorsey. it is a good move. and how about the board. if you take a look at the board members, they are not engaged with the product. which is really important for a company that needs a product. and david curry only tweeted 98 times. someone only has eight tweets. why is this important. >> they should know the product. know the pitfalls going forward and what changes need to be done. whether they know, they could know the change and be ahead of the curve. so the slowdown in users caught

them by surprise and that is why they ended up going into the rut and that is why a product focused by jack is important. and we think ed williams is important here. and adam bane running the global revenues and ed williams stopping selling shares is important as well. anden dickive of what he thinks the future. >> getting back to the board. they tweeted so few times do you think they need to be replaced because they are not actively engaged with the product. >> we called them out. they have other people there. they were fine for the earlier stages of the company but other media type tech people to have in there and expertise with the innovation and the monetization side. >> using their own arguments could you say these guys and they could be logged off users. >> they could. >> and they are just as valuable to the company in some way. >> well we've seen that they are less targeting. >> well if you think about

industry support, your friends buying into the fact you want to be ceo. what about wall street support. that is important with the stock price. we are talking about the stock. does he have wall street support? i don't see it. >> the interesting point is when we put this idea out two months ago we wanted to see how would wall street react, would the stock get hit on this news and i think what woof seen is support, when you look at the available possible real candidates, who is the best. when you go through the candidates, you realize jack has the most product knowledge and support internally and externally and has shown it. and today's reaction shows you how wall street thinks about it and getting the ceo situation solved -- >> even if he is still the ceo square. >> correct. >> bob, thank you. >> thanks for having me. >> bob peck, sun trust, the bob peck as you call him. >> great job on that. he comes ab sits down. >> he's a pro. he's part of the family. >> am dext truss.

>> i've been wrong on this a long time. a couple of weeks ago he said it was trading 29. and you said what is the trade on twitter. the on yens answer is to -- the obvious answer is to buy it here. but 25 is the low. and now we're back at $29. against the $25 level you would own it. but the report at the end of the month, will this do this kitchen sink, new ceo and will the stock plummet on the back of it. short of that, i think you can own it here. >> i can't wait until it is perry scoped. that was very amusing. with twitter and ralph lauren getting a bounce after the ceo announcements we want to take a look at what other stocks could benefit from a new ceo. so let's go around the horn. guy, we'll start with you. >> get out a pillar. well, look, we talked about it last night when we heard the announcement the stock was up a couple of bucks and it built on it today. that is not good for the outgoing ceo. it is good for the stock.

and i think caterpillar is ripe for something like that. it has underperformed for three years and we find ourselves at five or six years lows. i understand the business they find themselves in are challenging. but it is the job of the ceo to figure that out ahead of time. i don't think he's done a decent job. i think if he stepped aside he would have -- >> and so pink slip for him. >> no. i'm just playing the game. >> b.k. >> for me it is ibm and jenny romiddy. if you look at the stock when he started. she started in january 2012 and it is down 21% that is in a market up 20%. i know we're down the last couple of weeks. but the disparity is unbelievable. and the huge buyback that they've reduced share count by 15% it says what is going on with the company. and over the last couple of years companies get rewarded for

buying back stock so how could you have a ceo that has done nothing except to buy back stock and it continues to fall down and that is where you look for the pink slip. >> mean is macmarion. you have half from a copper background and half from an oil background and this is a company that should be split up. so carl icahn will make some changes and hopefully he ousts some management and gets it in direction. >> and believe it or not i'm going to an airline. and it is american airlines. sand you would think they would be further along than they are. and when you look at the debt in the company it. was $12 billion and now it is $15. and they've added to the debt. and others have been reducing the cash in a great way and the debt will get higher because they are going to refresh the

airplanes themselves. so this only gets them into a worse spot quite frankly. so i'm concerned about this. still like the company. the olig onology, there are concerns if we see a downturn in the market place, american airlines is the names that could be under pressure. and we do have breaking news on s&p 500 changes. to melissa. >>ver isk analystics is in and global is out. this will take place wednesday, october 7th. the commodities company down about 70% year-to-date to move to the s&p mid cap 400 and this will take place on wednesday october 7th. ver isk will join the s&p 500 then. >> thank you seema. still ahead, market sentiment at a five year low according to a top strategist but that could mean the best time to buy. we'll explain. and as the third quarter wraps up, could there be a q4

comeback. dom chi has the details. >> when we talk about the fourth quarter, it is all about santa claus and rallies and whether the market has the seasonably strong time. we'll go through the money after the break so keep it height here on "fast money." we've got trouble in tummy town.

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welcome back to "fast money." stocks closing at a very ugly third quarterment on a high note, with the dow gaining 235 points but the dow barely made a move. and among s&p sectors, energy was the worst performer, falling 18% on materials and health care also dropped double-digits. here is what is coming up in the second half of "fast money." tesla finally unveiling the new car with plenty of fanfare but the stock underperformed the bullish tape today. we have an analyst that said the next car is the real key to the future of the company. plus something strange is happening why the junk bonds. a strategist who said a slow-moving train wreck is coming. but first stocks are in the red for the first three quarters of the year. something that hasn't happened since 2011 but if history is an indication it might not be a bad thing for the market. dom chi is back in headquarters to explain.

dom? >> melissa, tis the season for the seasonality stats of how the q4 does. and remember, everybody says it is a strong time of the market. so take a look at the overall stats. they krufrmged the -- crunched the numbers and going back to the 1920s. the s&p 500 on average is up 2.5% in the fourth quarter. and it is up 72% of the time. so nearly three out of every four years. that tells a positive story. but what happens if we're negative year-to-date going into the fourth quarter. the numbers change a little bit. check this out. because we looked at those numbers as well. there were 30 times when the s&p 500 has been negative year-to-date ending the fourth quarter. when that happens, in the 30 instances, you can see here, we end up negative again in the s&p 500 for the fourth quarter about half of the time. 47%. so a little bit off a coin toss. and the average return here is down three quarters of 1%.

or close to that. and now the median, the middle observation is up 2%. but over all, melissa, a lot of conflicting, conflicting data. we'll see what happens in the fourth quarter. back over to you. >> thanks dom chu at headquarters. david, what do you make of all of the stats. that is interesting. how do you think we set up? >> i think we're set up for a fourth quarter move higher. >> even with the fed hike. >> i think people are factoring that in already. you think they should have dochb it. we talked about it. but i think we're setting up for a fourth quarter rally and we'll have another chase scenario. in my opinion the hedge funds are massively underperforming. ifner not going out of business, the guys under water are chasing tape. so the high growth names will continue to move up. >> there is another man betting on a fourth quarter comeback and that is tom lee. we wanted to see how bullish he is in three key market areas so tom is here to give us a break down. and tom -- good to see you. i want to start off with your

outlook on q3 categories and to grade on a scale of 1-10, how bullish are you? >> i'm actually fairly bullish. i would give it an eight out of ten. >> eight bulls out of ten. tom, why is that? what are you seeing that other people aren't seeing. >> how market reacts to earnings has to do with expectations and we were in boston this week. people are expecting a horror for q3. and things are low. and the dollar isn't as strong as it was earlier this year so it will be a tail wind as companies talk about visibility. oil stabilizing but you have to remember the dollar using fire data robbed about $85 billion from the s&p earnings this year and that is $10 per share head wind and for the first part of next year, so the dollar is a tail wind next year. >> next up, tom, your take on china which spurred over the summer. so 1-10 bulls, how bullish are

ow on china. >> i'm not a china expert but i put myself at six. meaning i think i'm a little bit above average. [ mooing ] now, that wasn't me. [ laughter ] i think what we have to remember is china still has a good demographic story about the migration from rural to urban. the consumer is saving a lot of money. i think there is an investment slowdown but investors are bracing for a recession there. so i think six out of ten because i don't think it is at bad. >> and we had you on before and you were bullish during the turmoil, tom, so your ultimate belief seems to me, if i'm connecting the dots, that you don't think what is going on in chooip will have a direct impact on what is happening here in the u.s.? >> yeah. i think what is important to keep in mind is that global markets have bear markets three times as often as the u.s. stock market. meaning we could see bearish trends develop elsewhere and it

is not always developing into the u.s. and in 1989, japan was a bigger share of global glpd and it did not spill over into the u.s. >> so the next and last question, tom, how are you feel being the u.s. stock market. 1-10, how bullish are you? >> i'm going to give it ten out of ten. >> wow! [ mooing ] >> i'm glad you don't have spinal tap, like is there a number 11. and you have to keep in mind expectations are low. and i saw the dom data. and the septembers year-to-date that are negative are almost all bear markets. what you have to think about is seasonals are strong. when you have a down q3, q4 is up 90% of the time. you reverse the selloff in q3. so that is one factor. second you have to keep in mind is if there is a global downturn, people are going to

migrate to the quality market, since 2009, that has been the s&p. so i think the s&p will be a recipient of capital. ands guys mentioned earlier, i think there is a chase coming on in the fourth quarter. because unless you think it is going to get worse and short that, managers are going to want to have some beta in the fourth quarter. >> tom, great to see you. >> great to see you. >> tom lee of fund trat. ten out of ten bulls on the u.s. stock market. and he says capital flight to the u.s. is a safe haven. i feel like we haven't seen that though. >> we haven't seen it recently. in the last couple of months when you germany and china down and the next thing you know you see the u.s. down. so from my perspective, i think we see what happens in the emerging markets and start to see peer in the u.s. and one thing tom spawned on about is expectations are so low. when you get negative, everybody is on one side of the boat and

you want to be on the other. and boats can be ripping type of rallies and you can make some money. >> and on a scale of 1-10, bulls, b.k., what would you be? >> is there a negative 11. >> but for trade. >> for a trade, i think there is absolutely -- and i think oil, ex on mobile, one of those ables is the place to be contrarian. >> do you want to rate yourself on bullishness? >> have you seen spinal tap. top ten movie of all time. you should watch it. we should watch it this weekend, i'm thinking. what is my answer to that. i would say listen, i get the earnings 8 out of 10 but does it include earnings revenue. because the earnings are good. but it is the revenue growth that is important. >> your bullish, so are you guys as bullish as tom lee is? >> i'm like a 7.5.

>> bull. >> moo. >> i do agree with guy. i think the topline growth aspect is very interesting. we need that to come back. creative earnings are not a good thing for in thmarket but i do think in general this is a nice trade to the upside to stay long on stocks. >> we discussed doing fractional but we decided to pull int edgers. >> elon musk, and is the car enough for new investors. all of the details next. and plus is a meltdown coming. a top strategist of bank of america says he sees a train wreck about to happen, right after the break, "fast money" is still ahead.

welcome back to "fast money." there is plenty of chatner the high yield bond but what exactly is it. high yield bonds called junk bonds are debt issued by a company to raise capital just like any other bond but because they are rated lower they are riskier. they offer higher rates of returns and because they are sensitive to the market

environment they trade more like stocks an they can often predict where stocks are going. over the past month high yield bonds and stocks have been tightly correlated. guy taking a look at this for a while. >> and b.k. talks about this all of the time. and we mentioned this last night in absentia, and we traded that an an etf that measures high yield and we traded down to the lows saw in 2011. the scary part is the reason why people -- this is just a generalality, people get into bonds because they are less risky. but when high yield trades like stocks it is dangerous and that is what we're seeing here. there is a confluence of events which leads people to believe the high yield market is about to implode. we're close but not there yet. >> well the high yield bond etf is trading near multi-year lows and carl icahn thinks a bigger disaster is coming. here is what he said today on the half time record. >> the high yields for many

reasons are very vulnerable. too many companies borrowed against them and some cannot pay back. they have very poor confidence. and this is the real fair part, there is no liquidity for them. and people think there is. and when they understand that, it is going to be like in the movie theater running out of the exit and there is no room in the exit. >> he isn't alone in that view. bank of america high yield strategist said junk bonds could set up for a slow-moving train wreck. he is with us now. and you say this is accelerating. michael, what i found staggering is that you found for five months in a row more than 50% of the sectors in the high yield index had negative high yield returns and the longest streak since 2008. when you bring up 2008, that is a bad sign. what are you seeing in the deterioration field. >> it is bad when you bring up

200. i don't know if it is a 2008 scenario. the banks are much healthier than in 2008. that was a huge leveraged football crisis and we don't have that same -- financial crisis and we don't that same thing today. and we should think about 2008, 2009, prebust. and i listened to carl's show this morning for the first time and i don't see what he is saying. quantitative easing have created high yield corporate where they can gather money at high level and investment grade as well and one of the biggest beneficiaries of easing monetary policy. the market has grown in size by 77%. investment grade debt has grown in size by two times. at some point, unless you have meaningful earnings, you can't sustain high leverage indefinitely. now i don't think this necessarily turns into a disaster overnight.

you know, it is probably death by a thousand cuts in a multi-year weakness in the asset class. >> is the downturn, will it be exacerbated by the presence and the volume in the hyg or the lack of liquidity i should say or the increase in the number of investors, particularly retail, and are you concerned about that aspect of the trade this time around. >> it is similar to what it was in 98 and 99. it was owned by the retail as well. the etf are small portion of high yield. they only hold about 2.5 to 3% within the $1.3 trillion high market. i'm less concerned about the etf. in terms of mutual fund, what is the potential is they haven't materialized in the outflows. if you do work on flows, you see that flows follow returns. and given the negative returns we've had and you mentioned

melissa, you would expect massive outflows you you haven't gotten them because i think you've had 30 billion leave the market since the tantrum. so many have been flushed out of the market. but that doesn't mean you can't still have price loss. you can't have wider spreads and higher yields. >> and i want to bottom line this. because when you have a slow moving train wreck is about to accelerate. you don't sound like you're worried about the train wreck happening because the outflows aren't actually hitting the sector? >> well i think the key is that your missing the biggest issue. it is not the retail out flow, it is the fundamentals, and the high leverage. that the turn of the credit cycle is upon us in the sense that quantitative easing and monetary policy has boosted leverage. ebidta is a third of what it should be with the default rate where it is. the economy growing where it is. and equity markets where it is. so this is a big, big problem. you are going to see defaults

pick up. this isn't just a commodities story, and metals and mining and energy. it is broader than that. and the fundamentals are as poor as we have seen them. >> right. >> and so that is the issue. so my point is that this isn't just retail outflows. this is much bigger. this is fundamentals and that is i would argue much worse because it takes it from a technical to a fundamental story. >> michael, thank you. fascinating stuff. bank of america, merrill lynch. the point of the migration because it was just an energy story and now he makes the point that it moved into retail and telecom and now health care. >> right. an this is part of every cycle where you have a credit boom and somebody borrows too much and then you have the credit bust. and when we shows the stocks and high yield bonds and they are using spy to leverage the link between the two markets. >> still ahead, drivers are behind the wheel of the new model x but will it live up to

the hype. got the details ahead. at mfs investment management, we believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management.

there is only about a few inches separating the side mirrors on each side of the car.

so we're going to open the doors where there is barely enough room to squeeze between the two cars. >> that was elon musk demonstrating just how intelligent the falcons wings really are. the launch event in fremont last night. so did the model live up to the hype. and the senior vice president has a buy rating on the stock, dan, it is great to see you. in terms of how many cars will sell and whether or not they can keep up on production, which will we get a good read on tesla. >> thanks for having me back. it is a pleasure being here. this quarter really doesn't matter. we've said in our notes, they're going to deliver a symbolic or nominal amount. i don't think there is anything exciting this quarter. so they are going to report deliveries in a few days. i don't think there is anything to be read into the delivery of the model x right now. it is very small. it is coming down to what will happen next year. how many they can deliver next year as they ramp production. they are doing model s and x on

the production line. it is a tough thing to do and they are doing it. for the model x, it is all about next year and going into '17 and then all about the future of the -- of tesla is all about the model 3 so that is a separate issue. >> and quickly, i think kun western is cannibalization, with the model s and then putting the model x in, is there a increase that the model x buyer is a model s who decided on x instead. >> i don't think there is much cannibalization. it opens the market to a new set of buyers that would not buy the model s. it is families, women. a big market that is not usually the market for the model s. we've done a survey that shows when we initiated it a few months ago we did a survey that shows there is 7% of survey respondents who in the market for a car who would want to buy a tesla. there is demand enough for both cars. it is different preferences for

different people. and i don't see a cannibalization or a pricing issue. we surveyed owners a few months ago and asked them about what car they had and will own and people are paying a 60% premium to buy a tesla. so 13 of the top 20 models had an asp of less than $60,000 for the people who owns it before. so i don't see the issue with placing or -- pricing or too high of a pricing hurting them right now. >> dan, great to hear from you, of jeffries. paypal has been crushed. more pain ahead. and so now mike has all of the action. >> seven times the average daily put volume in paypal today. the second day we've seen it. a buyer of 15,000 puts and today another 15,000 put buy. october 30, 20.5 straight puts and if this trader is right, they are betting it will be down

10% in a few weeks time. >> thank you, mike. "options action" on every friday. by the way, anybody a paypal buyer? >> when you talk about puts two days in a row. you stay away. he's spot on. >> coming up, traders will tell you what they are watching tomorrow. stay tuned. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

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it is time now for the final trade. so let's go around the horn. pit boss. >> i'm keeping an eye on hilton. it looks like the stock might be going higher. i brot into it. giddy and up. >> david stewart. >> gap. i think in prefas for a trade i think it is a buy here. it was down 6% before they lost the key executive that went over to ralph lauren. i think you can get a pop. it is worth a buy. >> and kevin. >> the negative 11 bulls. >> i mentioned chevron or exxon-mobil. we might get a breakout from this to get a good counter red. >> ten bulls on chevron. >> yes, ten horns or 20. >> guy. >> and football on friday night.

>> ibb. biotech index. up today. doesn't build on that. that is what [ inaudible ] is watching. >> i'm melissa lee. see you back here tomorrow at 5:00 for more "fast money." meantime, "mad money" with jim cramer starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there is always a bull market somewhere and i promise to hell you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramer-america. other people want to make friends, i want to make you some money. to teach, coach and putner perspective. call me on tweet me at jim cramer. so long september. good-bye to a horrendous third quarter. where the markets declines almost