nokes don't know what i'm talking about, it's on our website on cnbc.com. see you tonight. >> see you tonight and see you tomorrow back there at the stock exchange. catch special live coverage of the republican convention right here on cnbc tonight at 10:00 p.m. eastern. >> that does it for "closing bell." thanks for joining us. "fast money" begins right now. >> okay. this is it. "fast money" starting right now. live from the nasdaq market site overlooking "new york times"'s times skwarz i'm simon hobbs in for melissa lee. tonight on "fast" we're hours away from the biggest speech of donald trump's life. he will formally accept his party's nomination for president of this country. we have coverage all hour from both sides of the aisle, including former republican vice president dan quayle and representative harold ford jr. they will tell what you a trump presidency would mean for business and this market. plus, we're all tonight's big earnings mover. chipotle, starbucks and visa all just reporting.

full team coverage all over the conference calls, and we'll bring you the headlines as they emerge and that's where we begin tonight. starbucks tumbling on an earnings miss. chipotle volatile after hours on another mess, and visa holding steady. now, we've had results this week, of course, from big tech, banks and now consumer stocks. have the earnings or do the earnings justify where stocks now trade? >> that's a great question, simon. >> i haven't asked you yet. >> guy, let's start with you. >> well, were you sort of looking at me, i apologize. >> false start, false sglarlt can we try it again are. >> just start from the beginning of the show. >> appreciate that, simon. thanks for asking. listen, the earnings once again have been a mixed bag. you mentioned chipotle. i can give you a microsoft on the other side which was outstanding. you mentioned ibm, there was goldman sachs that had a great quarter. earnings absolutely do matter. the question is does the economic environment we find ourselves in justify what i

believe is a 19 forward multiple on the s&p? some would argue on different metrics it's much higher. it's closer to 25, but that's what you have -- i think that's what you have to sort of wrap your head around. i would submit the answer is no. based on interest rates can go down. others would say the exact onit. >> again, this is the same age-old conversation we have on this show. how can you say this isn't fundamentals? it's in fact fundamentals when interest rates are zero, when there's zero cost to capital. companies should be trading at a much higher multiple, earnings yield, et cetera, et cetera. the problem for starbucks it comes down company by company. starbucks around 32, 33 times their current numbers, maybe 28, 27 times next year. the bar is very, very high for a company that i own, by the way. do i think the china story is not what it's about. it's about u.s. comps and the bar is very difficult and the valuation is very difficult. >> karen? >> we talk about this a lot, kim, particularly about the idea that it's not a market of stocks, it is it is a market of

stocks, not a stock market. great examples of things that are good. a nim that i like and talk about a lot, united rental. it's the largest equipment rental company in the world, and they seem to have really hit an inflection point in the last quarter. that's really good portending growth in the economy. >> but the broader point is what is the tenor of the earnings that we're now sneeg do they justify where we are, do you think? >> i don't think it matters. >> you don't think it matters? >> because it goes back to interest rates. as long as every central bank is willing to be the backstop, who cares about the earnings? the markets hasn't cared about earnings. i mean, for the last 18 months we've gone sideways, a great market if you're a long, short type of hedge fund manager like karen and tim, you can get in there and pick individual stocks. that's this type of market. i don't think to the overall market the earnings really matter so much. i mean, people are buying stocks like at&t because of the yield. they are not buying it because of the earnings. as long as they are good enough and they don't think they will lose the yield i think people

continue to stay in the names. >> a lot of people are buying stocks and not for yields. a lot of sectors where you do have earnings growth and a lot of secretary thoors are interesting like health care and even phrma and there's a place where markets were at all-time highs. this is about equities, all know about the earnings recession and the renat, as i said last night, it's not a trough. earnings are set to go up higher especially when we look at year over year and the bar is very low. stocks stay near the highs unless we get an event. >> why is the barlow? >> think where we've come from over the last six, seven quarters. everybody knows corporations have had difficulties, people know about labor costs and struggles with the dollar. the reasons why companies shouldn't be performing in this environment are out there and, therefore, a lot of companies have been extremely cautious? why would it make sense for their guidance to be, where they

want? sglrns there is this, arguments that the interest rates will come and they may come slightly sooner than people think. today mario draghi at the ecb was not as dovish as he usually is on brexit which caught a lot of people by surprise. >> actions speak louder than words. our fed has been fraying to play the game. months ago they were talking about several rate hikes this year. tim will disagree and price is truth and the bond market came back real strongly today after selling off earlier. global rates to me -- germany on july 13, for the first time in their history, issued ten-year government bonds with a negative yield. i don't know what that means but i can't believe it's in a constructive thing. >> do you really believe interest rates around the world are at zero or equate to the global economy and where it's at? >> i thought i did, and i still think i do, but maybe i've been totally missing it all along.

like i thought interest rates globally, continuing to contract meant that we have this deflationary pressures globally and a global slowdown. maybe i've missed the boat entirely. i don't know. that's the thing. that's what i've been struggling with for quite some time. >> b.k.? >> to me, interest rates around the world, especially when they are negative, you're looking at a bubble, and this is the black swan. we can talk about earnings all we want but a rising interest rate, a rising interest rate environment is the black swan for equities. that's going to be what takes this whole thing apart. you talk about -- i mean, unless we have some kind of massive growth that we really have to -- you know, we can really outpace. >> don't we need growth to get the rising interest rates? >> not at all. >> you think some exogenous company or what? >> you can get a stagflationary event. right, everybody is excited about oil going up and if oil goes up and we still have 3% global growth that's not going to be good. >> you think rates are going lower? >> i think rates are going lower. >> which means equities are going higher. >> which seems that way. >> so we all agree. let's move on from wall street

to washington. tonight is the big night for donald trump, of course. he will formally accept his party's nomination for president. what implication, if any, will it have for the stock market? former tennessee representative harold ford is a convention veteran giving the keynote address in 2000 and managing director at morgan stanley and, of course, an nbc news analyst. i think maybe for many people the burning question would be given where we are why hillary clinton isn't doing bert at the moment in the polls? >> simon, good to be with you and thanks for the kind words. i think that she is at a point where most candidates are this stage of the race. remember, this is a country this is divided. even when you look at races that president obama won four and eight years ago, won by three, four, five points in the national polling and larger numbers when you look at the state-by-state polling. i give credit to the republicans in this regard. they have certainly had an unusual convention. for those who have complained in the past that political conventions are stayed,

political, scripted, the republican convention has been very different than that. tonight is a big night for donald trump because of all of the mishaps and missteps and accusations of plagiarism at this convention and most remarkable thing i've ever seen at the convention, what ted cruz did last night, if donald trump and his daughter have an outstanding evenings, the convention will be remembered for that, and then we'll get a roub of polling to see what has happened and next week the democrats go. secretary clinton is going to pick her running mate here in the next 24 hours, it is said. she will pick a good one and she will have a week to put on not only a show but give the country an opportunity to meet her vice president and hear substantively take the country and after next week the polling takes on a new level of seriousness and another layer of credibility when we read them. >> isn't the game here for trump really all about the swing states? yes, he's got to look at the national picture. yes, hill little come with her own vp choice, but essentially

if he can hone a message to other people that hits home in the rustbelt states and the swing states of this country, he can basically rip the carpet from under your party. isn't that the big danger here and what he may succeed in extremely well? >> well, i think that's definitely his plan and the question is whether or not he'll be able to execute that plan. i think a couple of factors you have to look. a i think the country always vote for steady, smart, reliable hands to lead the country. secretary clinton would obviously make history being the first woman elected president. demographics are also something presidential candidates look to in the rustbelt states, the rise of the importance of female voters and african-american voters. and hispanic voters. secretary clinton maintains a lead. if she maintains a demographic lead in the result belt states, michigan, ohio, pennsylvania and illinois, i think that's a tall

hurdle for mr. trump to overcome. however, he did pick a midwestern governor. i thought governor pence gave a very solid address last night. looked like an adult and a smart steady hand himself, but the question is does the country want donald trump, some of the outlandish comments? one of the more outlandish ones is when he said yesterday to the "new york times" he would view the u.s.'s participation and willingness to defend the nato allies and would predicate it on whether they were supportive of us. it's a dangerous pox to take and could have an impact on markets around the globe, not only markets but certainly the way our allies view our partners. >> and that we could have a trade war and yet the markets trade at record highs. how do you believe that? >> betting markets believe secretary clinton will prevail and if mr. trump is successful you'll have a republican congress that could block some of the things he may want to do and mr. trump could change his

mind. he certainly has not been afraid of changing his mind over the course of this campaign, even over the course of his career so i think the markets are probably betting on a secretary clinton victory which i think -- i'm biased here which i think would be good for markets globally. >> good to see you. thanks very much for joining us. harold ford joining us, harold ford jr. as we await, of course, tonight's big night for donald trump at the convention. let's trade t.tim? >> i just don't think we can trade the market based pont elections right now. i don't think that the market is doing better because trump has done better in the polls. i don't think that anything regarding the momentum of the last six to eight weeks has anything to do with it. i think the elections in europe have had a lot more to do with our market than our own elections and i don't think the market is going to do anything in terms of addressing how traders are going to adjust their books until two weeks before this election. >> yeah, i mean, brexit taught us anything, we know that we can't rely on polls or rely on the betting markets so it's virtually impossible to try to

make a long-term investment decision, even a longer term trading decision on the polls. it's so far away from november. i mean, anything can happen in that period of time. >> i totally agree, but the question is do you then not invest which i would say no. i would say you go ahead with whatever your general investment philosophy is. one can't possibly know, even if i were to know for sure who won, i don't know what the market would do. >> i think the market does suggest dwsh the market is saying that secretary clinton is going to win in november. i think if the market thought donald trump had more than the chance that he has now, i don't think we'd be trading where we are? >> why, why? >> i think the market would be scared -- >> if she wins buy the rumor. >> status quo i think at this point in the cycle is bullish for market. >> do you think this election is about social or economic issues, and maybe that won't determine how the market performs here, but -- but i think as we look at what the economy is struggling,

from i'm not sure i've heard anything from any candidate that's the panacea. there is no panacea by the way, and that's probably would markets shouldn't be reacting. >> be sure to tune into our special report live from the republican national convention tonight at 10:00 eastern. that, of course, is when donald trump is due to speak. as we head to the break, here's a look at chipotle, lower after its earnings miss that. call now under way. will the c suites speak on the e. coli outlook and we'll ask a former vice president of the country dan quayle for his take on the republican nominee donald trump. he's called for the gop to unite around their candidate. what might he say tonight before trump's rnc speech? and later it's the rally that just won't quit, but what's really driving the move higher? we'll have a special report from none other than our own dom chu. that's ahead on "fast money."

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all. big names within the space seeing nice gains today, b.k. >> it really started with the gold market and the ecb meeting this morning. mario draghi left the door open a little bit for september, easing gold market and the euro rallied into it and fell and gold and the dollar are actually positively correlated. that means they are trading together right now. in my view gold has taken on this characteristic as the hedge against central banks. >> hold on. didn't gold rally today because in fact it's been trading in the opposite of the dollar. i mean, the dollar to you camp, you dollar people, you've actually had a pretty nice run and, in fact, the dollar has been stronger on a host of reasons but maybe because it was oversold. gold sold off in lock step. >> today if you watch the euro and gold and traded almost inverse. as son as the euro started the drop and the dollar started to rise and to my view has been the characteristic of gold this year. >> do you think that strong dollar will help the gold trade? >> yes. see, i totally think it's the

opposite. >> do you want to intervene here? >> it makes sense because your argument gold is also going to be the hedge against the world blowing up. >> dollar and gold are safe haven assets, in my view. >> the euro was down and the dollar was down. i thought were you saying -- >> the euro was down against the dollar. so if you just look at the dollar index that's going to be 57% euro and everything else. so the euro is down stligtly, but if you look at the intraday moves, as son as draghi basically said we're not doing anything now euro rallied, dollar fell and then he kind of opened the door to september and that's when everything started to move the opposite direction. >> again, think that if you look -- if the boj and ecb surprised people by not saying more dovish things and i think i get back, to again, fundamentals say, current accounts, surpluses in japan and europe more than strengthen the currencies and keep those things in line against the dollar. >> listen, when japan went negative interest rate policy

many months ago, we talked about gold back then, look what the move has been since. let's just call it january. in a name like newmont mining, up 3%, why? not only because of the price of gold, we'll get a chance to talk about it. do the gold miners work? does gold still work. despite the fact that the dollar is going to real, i'm in b.conversation,'s cam on this one. gold is the next currency and goes higher. >> meantime, it's an earnings extravaganza on "fast." as we head to the break a look at other movers, chipotle and starbucks moving lower and visa flat. i'm simon hobbs. you're watching cnbc, first in business worldwide. meantime, here what sells coming up on "fast." >> ladies and gentlemen, this man could be your president. >> i would look in that fat ugly face of hers and say, rosie,

you're fired. so does former vice president dan quayle support him for president? he'll reveal in an upcoming interview. >> if you thought that was strange, wait until you hear about the stocks that are fueling the rally. we'll give you the names when "fast money" returns. your insurance company won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan.

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welcome back to "fast money." shares of shipmently volatile in the after-hours session. let's get to kate rogers for that news. >> reporter: chipotle reporting misses on the top and bottom lines and comp store sales were

down more than expected. the stock was initially higher on the news but has since started falling, down nearly 2%. as we all know, chipotle has been struggling in recovering from the e. coli and norovirus outbreaks it was hit with earlier in the year. to counter this chipotle adopted chordso at some stores which it will expand to all stores by the end of the year and also launched a loyalty program offered free food throughout the summer. cla gave them an upgrade on that. here's the ceo talking about the program on the conference call. >> our main objective with chiptopia is a reward that incentivizes our loyal customer and to restore their visit frequency back to the prior levels. most of our customers have returned to chipotle but not at the same frequency so the program is targeted at those customers. >> reporter: chipotle mentioned 30% of transactions right now are engaged with chiptopia which

could mean why the stock was initially higher after the report came out and they are rolling out a traceability program that will help them to ensure safety. they also opened 116 restaurants so far this year. the stock though is down 13% year to date. simon, back over now. >> that track will be expenseive. >> thanks so much. >> let's trade it around. >> who has been to a chipotle recent successfully. >> i have. >> are you a loyalty member? >> seen this on this desk. i'll throw anything in my mouth and enjoy it. any way, chipotle not cheap at any time. june is better and july looks better, too, and stocks down. you don't need to buy it here and, again, it's not cheap. i still think that they are going to have a significant image problem to overcome. >> well, they obviously have, right? everybody thought that it would recover very quickly. clearly the new program they are rolling out is addressing that. to me it's a wait and see. i don't think it's a bad buy here because you know where you're stopped out. 384.

held above that. for most of june, all of july, so if you want to buy it here you know that's where your stop out is. >> okay. coming up on the program with stocks holding steady right near all-time highs, what are some. undercover names that have helped fuel the charge? we will have those names for you and tonight, of course, is the night republican nominee donald trump takes the stage in what may be his most important speech ever. john harwood, what is the late on the expectations at the rnc? >> reporter: simon, this is donald trump's to move past the controversies of the last few days over his wife's speech and ted cruz's speech and show the american people why he should be president of the united states. we'll tell you all about it after this break on "fast mon " money." between life and death. for partners in health, time is life. we have 18,000 people around the world. the microsoft cloud helps our entire staff stay connected and work together in real time

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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back to "fast money." the dow ending a nine-day winning streak today, having only its third day in the red though this money. the s&p and the nasdaq also lower today. energy and industrials were the worst performing sectors.

here's what's coming up in the second half of "fast money" this thursday afternoon. stocks have spent the last week making record highs. we'll tell you the three under-the-radar names that are fueling the rally. plus, check out where we stand on the shares of chipotle, pandora, visa and starbucks, all on the move after their earnings reports. we are monitoring those earnings calls, and we will bring you any of the relevant headlines later in this hour. first, we start with the republican national convention wrapping up, of course, tonight, with donald trump's big speech. this after last night's stunning cruz snub as far as many people are concerned. cnbc's john harwood is in cleveland with the latest. john, what is the expectation of what trump can now achieve? >> reporter: well, the first three days have complicated his task, but the good news for strump that the fourth day, the nominee's acceptance speech, is by far the most important event in any convention, and the one that defines whether it's

successful. donald trump was check out the stable trying to get ready and testing the microphones. he's going have a chance to convince people over the course of the better part of an hour that he is capable of sitting behind the desk in the oval office and serving as commander in chief and needs to warm up his image a little bit. his unfavorables are pretty high. yet to be known if he'll address in any way the controversy that he aroused with his interview with the "new york times" where he seemed to equivocate on the commitments -- decades old commitment of nato to defend its allies against russian aggression. he told the "times" he would check and see whether allies that might have been violated by russian aggression had paid their bills before deciding whether the u.s. would respond. republican foreign policy strategists are not pleased with that. a republican leader called that a rookie mistake and in an interview that i did before those comments i asked senator tom cotton who himself is a

future presidential candidate whether he was concerned donald trump was too close to put pumpt take a listen. one of the questions that's been raised about trump is he more friendly with russia than is in america's best interest to be? >> vladimir putin was a kgb spy and never got over that. he does not have america's best interests at heart or any american interest at heart. i suspect this week when donald trump is the nominee and receive similar briefings to what i receive he may have a different perspective on vladimir putin and what he's doing to our america's interests in asia and europe. >> reporter: not confidence-inspiring but donald trump has a chance before 30 million people to tell them tonight why he should be their next president. we'll see how he handles the pressure. >> yes, indeed. we'll watch it live on cnbc with your special starting at 10:00. john harwood in cleveland.

will the republican party rally around their nominee, donald trump. former vice president dan quayle joins us now in an exclusive interview. susan. >> reporter: that's right. we do have dan quayle, the former u.s. vice president, just finishing your 18 holes. you're here in tahoe instead of cleveland. >> take a look around. now tell me where you would rather be. would you rather be here in sunny tahoe or would you rather be back fighting all the wars back in cleveland? i pick this. >> reporter: you haven't been to a national convention since 1996. >> right. >> reporter: were you watching last night because the nation is still talking about what torrez did and said. >> i think everyone is probably disappointed in ted cruz in not endorsing donald trump. he did take the pledge. i understand the personalities and that he was upset with the attacks on his wife and his father, i understand that, i fully understand that, and that's happened to me and a lot

of other people, but i think you really have to put the country first and -- >> reporter: and to do it on such a national stage. >> i hope it's better to ask this question. is it better to have a republican president or democrat president? that's the fundamental question and everyone should vote. >> reporter: i have to ask you about the top news story and that's roger ailes and he's out as ceo. what's your reaction? >> roger ailes is a longtime friend of minute. i don't know all the details of the accusations or the details of the new arrangement. i've been playing golf for the last five house, but i would imagine that roger ailes is doing exactly what is best for fox news. >> reporter: but do you think it impacts the republican party at all? >> i don't think it impacts the republican party, no. i don't think it does because, you know, the people on fox news that report and have their programs, as far as i know, they are going to stay, and nobody is

indispensable, even roger ailes, and he's told me that, too, that nobody is ever indispensable. he'll be a hard person to fill or to replace, very difficult to replace. >> reporter: rupert murdoch has stepped in. >> i think that's probably tempry. i doubt if that's long term but i don't know. i presume it's very temporary. >> reporter: speaking of personnel, what about mike pence as vp choice? >> he's a great choice. i've known mike for a long time. i campaigned for him when he lost his first two congressional races, and then he went to become a radio commentator and he had a very soft voice and, you know, he was low key. he wasn't your normal radio commentator. he had a big following though in indiana because he was serious and talked about the issues and what the people of indiana were interested in. i think it's a very good choice, and i think it does reflect on how donald trump is going to govern. he's going to go with people that are well known, have good credentials, that are solid citizens and will do good work.

and i think mike pence is illustrative of that choice. >> reporter: mr. vice president, my colleague simon hobbs has a question for you. >> mr. vice president, you'll be aware many people struggle with some. things that trump has said about women in particular or the saltiness of the language during some. debates when he was challenging. the ban on muslims, a long list of things that people worry about. do you think that donald trump represents traditional republican values? >> well, look, he defeated 16, 17 republican candidates. a few of those i supported in the primary. he was very successful. the voters in the republican primary have spoken, and do we want a republican president or not? i do, and i think most republicans, and i think the polls are starting to go that way, that most republicans are starting to rally around their nominee. the convention hasn't been perfect by any stretch of the

imagination but tonight is his night, and hopefully it will be a soiled speech. he'll show a path forward and that he will stick to that message throughout the campaign and be victorious. >> amongst the notable senior members of the party that have not rallied around him though, of course, are the bushes, the bush family, your former boss and their sons, their two sons. do you think the bush family should now make a formal endorsement. >> i'll leave that up to them. i lost bush family. i'm very close to 41, to barbara, to george, laura, you know, jeb, the whole family. the whole family, and they will speak for themselves, but, you know, i really believe in their heart of hearts that -- i would hope that they would want a republican president, but they will have to speak for themselves. >> but there are a number of

people, whether it's cruz or the koch brothers, senior members, important members of the party that continue to that their reservations? is there something trump can say tonight to pull those people in tonight, including the bushes? >> well, i hope so. look, you know, politics ask about addition. you want more and more people to join your campaign, to be supportive of you, so i hope tonight is a pivot in that direction to get more republicans, to get disenchanted democrats and to look at the independents because the independents are probably going to swing this election and we also have an independent candidate with gary johnson and governor -- former governor bill weld of massachusetts. i think they are getting around 13% or 11% in the polls. at 15% they will be on the debat debates. nobody has really factored that in. who will they take votes from? i don't think anybody knows right now and that's a factor that people even aren't

considering now. >> mr. vice president, you said before that trump can win. >> sorry, go ahead, simon. >> just to continue the conversation, mr. vice president. there are people looking at the convention that are concerned about the strength of the team and the depth of the bench. not just the controversiy over xwlaenl's speech and the interview that he did wehe suggested the members of nato who not automatically get the support of the united states if they were to be challenged from russia. can you comment on that, death grow to wit elders of the party need to perhaps reach out and ensure that he is fully aware of perhaps some of those security briefings or at least a greater sense of where other people think the party should be standing. >> well, just let me be very clear about this, you know. we're the leader of the nato alliance. we're in the nato appliance, and

the alliance and the trey says that we will come to the defense if there is a nato ally. i mean, that's a fact an i don't know what exactly was sid in that interview by i don't think there should be any equivocation on the nato alliance and in the support that we have. if that's the case of what we snuffed described that would the be a good message toe putin and others who want to take advantage of that. i can't tell you what was said but name a very strong supporter of nato and i would hope mr. trump is as well. >> final question for you. you said trump can win. he's still behind in the polls. are you still confidence? >> going to be an uphit bat. has a lot of money and has been around, and this is the year. outsider. people want change, quite

frangilli. if you're site with the direction of the country and there could be an obama term three and if mr. trump can capture the mood of the people then he can be successful. >> susan, thanks very much and thank you, of course, to former vice president dan quayle. let's discuss what we just heard. b.k.? >> well, i think the most important thing for the markets, everybody is worried in the markets if there's going to be a trade war with a trump presidency so that's what would get the markets most spooked. if we hear tonight some walking back of that, that would probably be a positive just for the economy and all so that's the one thing i'll be looking for in this speech. >> there's clearly fissures in the republican party and the

reference to the bush family is an important one and it's important to talk about how there's a process and acting. i actually think they will show up and be pretty strong. >> in terms of the stock market, defense, in terms what have we talked about, it all boils down to defense stocks. look at the core lockheed put up. they raised guidance for the full year much higher than the actual beat for the quarter. lockheed martin is a monsulphur stock. now it's traded a little hitch the last couple of days, but i've got to tell you something. weave talked about defense stocks now since the first obama president i? '08 and they have been on fire and i think they will continue to move from the lower left to the upper right as dennis gartman says. >> guy has been on this trade for probably since that

administration first took off so that's been an amazing trade. i think it's so difficult to have any idea of the implications of winning that i wouldn't trade on it. >> okay. don't forget to tune into our special live report from the republican national convention tonight at 10:00 p.m. tonight, because that's when donald trump is expected to take the stage. breaking news on the nba and dom chu has that. >> the nba has made it official now. they have now pulled the 2017 all-star game from the city of charlotte, north carolina. in the statement they say since march when north carolina enacted the legislation referred to here that was viewed as anti-lesbian, gay, bisexual, transdepend, the nba and the haar nets and franchise there have been working diligently and recognize the nba cannot choose every law and city and state that they do business and do not believe they can host the all-star activities in charlotte and look forward to perhaps restarting the plans for

all-star games in 2019 in charlotte provided there's an appropriate resolution to this matter. they have not yet chosen a venue for 2017, a decision come in the coming weeks. meantime, just in the last couple of minutes the sacramento kings have voiced their opinions about how they applaud the nba decision and charlotte hornets have expressed disappointment and there is a statement from the mayor of new orleans, mitch landrieu, basically saying the nba has been a good partner and new orleans would like to host 2017 games if called upon so interesting developments there on the nba side of things >> you know what. i remember being the lieutenant governor when they came out of that and said this would not be an act, all noise and there you go. shares of starbucks off its lows asth ceo howard schultz speaks to investors on the conference call. hear what he has to say about the quarter. you're watching "fast money" on cnbc. first in business worldwide. ♪

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until today. we managed to set the little records day by day. the stocks that hold the most risk is for the most part pulling their fair share. over the course of the last trading month the s&p 500 has gained 3.5%. the 20 biggest market cap indexes have all posted gains over that same period but they are on the more modest side of things compared to some of the smaller members of the large-cap index. of the 20 companies the average return is around 3.75%, just in overall line with the index's performance. >> where are the small incremental gains coming from. one place to look at is the smaller large-cap stocks that have really staged some really remarkable runs in that time frame. 32 index members have gained 10% or course of the past month but here's the thing. the average market cap for performers is around $27 billion. that's big and certainly not mega cap. another thing to watch eaks pektd, sovm some of the biggest bounces have come from stocks that have been beaten up as of

late. 13 of the gainers we just talked about still underwater year to date 2016. american airlines, also regeneron. if you're looking where the marginal incremental help will come, maybe those are some of the names, the question is can the record highs last until the mega caps really start to break out to the upside. >> my god you've got to concentrate on this show. >> you do have to concentrate. >> otherwise. >> details, details, details. >> if you don't concentrate you can find yourself in a couldn't versy. >> listen. >> the small caps are definite -- large, we get it. there's large caps that are participating and the small caps are break out. >> the iwm specifically is a hedge against the broader markets and the iwm i thought was an indicator of potentially the market trading off still trading to the upside. you still need the transports and i don't think you're getting

them yet and you're getting names like at&t. look at quarter they just reported. it's a typical at&t quarter. yet the stock has rallied significantly over the last couple of months. why? >> 4.5% difficult end. >> there you go. >> you do pay attention. >> see. >> i know some details. just not all of them. >> no controversy there. >> i like when you -- it's fun. it's called reparte. >> something like a disney or apple, what dom is referring, to the names we want to see take the broader markets higher and frankly i'm not sure that they will. if you look at the fundamentals, both valuation and the drivers and the catalyst to take these stocks to new levels, they are just not there, so like guy said, small cap and stocks that have been underperforming, with problems or they think that the world is going into recession, those are the names that still have room to catch up. >> still ahead on the program, a major bet in the options market that could spell trouble for two stocks reporting earnings next week. we'll explain right after the break. plus, shares of starbucks are

falling after its earnings report. deirdre bosa is in seattle covering that story. seattle. >> reporter: pat the original starbucks behind me. people are ordering frappuccino and the new massively popular coconut water drink. the question is it's not enough and the street was disappointed with the sales growth. especially here in the americas. we'll have more on the back of this break.

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reliably fast internet starts at $59.95 a month. comcast business. built for business. welcome back to "fast money." starbucks is falling on earnings. let's get to deirdre bosa outside the original starbucks store in seattle. >> reporter: hey, simon. well, as bill mentioned earlier, hour schultz has been known to try and cheer people up on the earnings conference call, but this quarter that was a tough task. as you mentioned, shares are falling in the after hours. inste instead, he pointed to potential confusion around its points system, rewards system, redesigned coming at a time when they are trying to roll out promotions. have a listen. >> what we underestimated was the interdependance of starbucks reward and happy hour and two powerful initiatives competing for partner and customer mind share during a discreet period

of time would disrupt who should have been strong positive inddependance and leverage. >> reporter: now, guys, he also spoke about some challenging conditions that may have weighed on results this quarter. for one, it hasn't been an easy consumer spending environment in the u.s., and he also pointed to turmoil in europe ahead that have brexit vote. there were, however, a few silver linings and starbucks has been gaining some traction and you saw growth of 7% in same store sales and also its mobile order and go order and pay system has been growing, and despite the redesign to that loyalty program it did see growth of about 18%. the challenges ahead though may prove greater. that's the thing here. remember, just recently starbucks says that it would increase pay for its employees. that is going to increase the company's costs and the americas, the sales here in the u.s., canada and latin america are struggling, so that is something to watch and it may be

sometime before another region makes up for that. make sure you tune into howard schultz. he'll be on "squawk on the street" tomorrow morning. back to you. >> time for a coffee. deirdre bosa joining us from the original starbucks in seattle. tim, you're long this stock, aren't you? >> always coffee for me, no frappuccinos, no soy things like guy drinks. not doing that. >> you're a man's man. >> i wasn't saying that. i'm telling you how i like my coffee. >> think about it here -- >> starbucks peaked around $62, currently trading 32 times. still not cheap. certainly relatively to its peers and its growth profile i think they are fairly valued. what i mean there's a lot of other places in this space that continue to dominate and they are taking market share from these and even some of the quick serve plays and $54, key for the stock. i don't trade out of it. >> the xlb has been on the rise this year. are the good times over for material stocks now and dan nathan is making a very special

appearance tonight, and it's also as if this wasn't enough at the smart board to break it down. >> here's the deal. the xlb, the energy select etf, a lot of put activity. two times average daily volume for all total volume in the xlb. two large trades. one of them caught my eye today when it was trading 48.50. an opening buyer of 20,000. the august 5th weekly 48 puts, paid 41 cents like i said to open. here's the thing that's interesting about this trade. in my eyes next week dow chemical and dupont, two of the largest components make up 20% of the etf earnings. generally not big movers but they have been underperformers. maybe it's one holder looking to get some protection into a potentially volatile event. >> okay. got to leave it there, dan. real short on time. nice to see you. don't forget, of course, "options action" 59:30 p.m. eastern. up next the final trade. hey gary, what are you doing?

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leer it is, the final trade. let's go around the horn. tim? >> not in charles, but in howard schultz we trust. i stay in starbucks. growth is there and valuation okay. >> karen? >> as much as i like what uri had to say, took money off the table and i think you should, too. >> b.k.? >> tlt, bought half a position and add a little bit. >> mr. adami? >> simon, you're bringing it this week.

bringing it home. tomorrow on friday, all the way to 5:30. >> going stronger? >> yes, it is, sir. >> thank you, team. i'm simon hobbs. catch more "fast money" tomorrow at 5:00 my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a 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, to entertain and teach and coach. so call me at 1-800-743-cnbc or tweet me @jimcramer. ah, the mighty have fallen. i'm talking about the