down 800 points on the dow. >> yes. >> that's the fourth worst points decline ever, down about 3% for all of the major indices as the yield curve inverted. there will be so much more on the massive sell off tonight on cnbc's special report "markets in turmoil." it starts at 7:00 p.m. as for today on the "closing bell" we're out of time. thank you for watching. >> "fast money" begins right now. ♪ stocks slammed as the bond markets flashes a major recession warning. the dow handing in one of its worst days of the year as fear grips wall street. so what should you be doing with your money following a day like today? our team of traders are standing by to break it all down. a special edition of "fast money" starts right now. and we are live from the nasdaq market site overlooking new york city's time squares i'm melissa lee. traders on the desk are tim seymour, karen finerman and guy

adami. the selling is widespread with the dow dropping more than 800 points all 11 s&p 500 sectors finishing the day in red the market meltdown leaving investors on edge and sparking fears a recession could be on its way. what is your take on the day, guy adami? >> my take on the day is it makes a lot of sense volatility is here i think volatility will continue to grind hard. pete can speak to this when is it over? that's what everybody wants to know so i can pontiff indicatic. we are looking for a vix that climbs to 30, we have seen it peak out before. or you are looking for the s&p 500 to put in a low of 2690 or so, which is midway between the low we saw december 24th and the recent high in the s&p 500 of 3025 carter will be on and i'm sure speak to levels, but those are the things you are looking for in terms of it doesn't make sense, i think it makes sense and i will say this as well. the gold market has been telling you something like this has been

in store for the last few months, mel. >> the data around the world, negative yields around the world have been telling you the same story. tim, we got a dose of very bad data that started us off on the wrong food. >> the data continues to get worse and guy talks about what he needs to see different. unfortunately, i think we're in a case where the data -- while the leading indicators 12 to 15 months ago started to give way. it is hard to say that the data is anywhere close to troughing, especially when we haven't begun to solve the trade disputes or trade restrictions which continue to be the dynamic you have japan to be watching, tomorrow we have retail sales in the united states, an empire state survey, a lot of surveys we have seen multi-year lows, hong kong obviously with the extreme case but, again, yesterday you saw german confidence indicators at 2011 area. that to me is a market where we didn't have any confidence so i need to see data change you are right, it is the data

that led us lower. >> yes and then you pile on top of that what secretary ross told "squawk box" this morning that effectively the september trade talks we thought were coming with the chinese coming to washington, d.c., nothing has been formalized yet. >> not so much. >> if we thought it was a catalyst, we don't know if it is going to happen at this point. >> yesterday's rally we had was on the trump news with china, maybe progress there i was surprised how strong the rally was because how many times are they going to play this, oh, there will be a deal, there will be a deal? this has been now we are coming up with a year when they first started tariffs. maybe they will start talking, maybe they won't i don't think we can rely on it. to me though, i mean there was a lot to hate about today. it didn't seem that ultra pan y panicky until the end. it started to sell off at the end. i don't know what to make of it all except, you know, the market is down 2.6% for the week. it is not that much off its all-time highs yet this action between monday and yesterday and today, the net

of that being down 2.6 is much worse than that, right ceos, they get uncomfortable as investors get uncomfortable. >> consumers get uncomfortable. >> consumers get uncomfortable looking at this kind of volatility so that's not great. you don't want to have a sort of self-fulfilling prophecy of fear begetting contraction. i don't know what to do here i'm not a buyer. normally i would say things trade down in integers i have a list but i'm not close to buying today. >> waiting a lot of people make the argument most americans are not in the stock market so they won't feel the pain. but they see a headline in the newspaper, dow down 800 points. >> they will call their broker or wherever their money is. we know the chinese economy is slowing down from where it had been, so powerful until now. then you hear the german news. the more people understand about the market and read the headlines the more scared they obviously will get i think we already know, this

algorithmic trading moved to the upside on tuesday when we went up 400 points like we went down 400 points on monday today is the same thing. these are algorithms hitting and they're flowing to the down side there's all of the headlines in the world you could use to trigger some of the moves to the down side. you mentioned volatile just last week -- actually, on monday we had huge buying of the january 30th strike calls in the vix. now, they were right last time when they were buying huge amounts of volatility index calls, and now are they going to be right again by the way, it doesn't mean it has to go to 30. it just means they are seeing upside and those volatility options could move very, very rapidly, mel, to the upside. >> right. >> if we get up towards 26, 27, they're moving it doesn't have to go through 30 that's what people forget so much of the time well, they bought the 30s, it has to go to 30. no, it doesn't they're just buying something they valued and they said, you know what? we're going to own this because we think this is going to

happen when you look at all of this right now, there's different things we were seeing put buyers, more so than i have seen in a long time, and i talked about it earlier but i will bring it up eem, 60,000 puts were rolled from august into september, and they went down from 40 1/2 to 37 1/2 they are expecting the eem, led by china, to go lower than it is even today they're expecting even more to the down side. >> all right so all day long we've been talking about the source of the selling, and it was the inversion of the yield curve. >> yes. >> there's huge debate whether or not it indicates we are going to be in a recession or not. does it matter at this point if that is the indicators for a recession? >> we're always looking for reasons to identify why things happen i understand, you want to be able to label it happened for these reasons, i totally get it. obviously, today specifically those headlines matter but go back and i will say it again, go back and look at the way facebook reversed after they reported earnings. that was 215 or so dollar stock, look where it is now same thing happened with amazon.

effectively, although not entirely the same level, apple has done very similar move to the down side. my point is they're big, huge stocks that sort of led this now, we will talk about the inverted yield curve yes, obviously it is not a great thing. the bulls will say it is different this time. i'm not certain it is the case quickly in terms of what people say about consumer confidence, you just said it we will have a special tonight the evening news will lead with dow down 800 people will see it for a couple of days and they will say, maybe we shouldn't be getting that starbucks. when 70% of the economy is driven by consumers and the consumers flinch, it is a problem. >> i don't know what camp i want to be put in i will speak for the bears right now and say it is right. three months out to ten has been inverted since may so to be clear, that tells you a market that really thinks the fed, to oversimplify it, the fed is really off sides because the fed is controlling the shortened of the curve at this point if you think about what a lot of talented strategists have come on our show to tell you is that when you have an inverted yield

curve, you have anywhere from 12 to 18 months where equities can -- >> can we show that graphic? we have the data behind it. >> we should do that. >> great. >> the bottom line is in a normalized yield curve environment, which there's no such thing as a normalized year old curve environment, you have periods where equities can continue to outperform until the teeth of the recession kick in the bottom line is that was never going on with ten-year bunds at minus basis points. that was never going on. you have a dynamic here which we have never seen. i get back to what i say the market is behaving, the bond market is behaving as if we have black swan risk, that we have three standard deviation risk goes and the moves in the bund market have been three standard deviation moves. they don't go away quietly. >> it wasn't happening when the fed had so few bullets left to use if there was an actual recession on the horizon. >> yes i mean it is amazing what is the next step to the thing? are they putting themselves

into -- or they've been put into a corner by the president who is continually just coming after them and after them and after them, mel. i will bring up one last thing this gold run we have seen, it has been going on for a while. i see a lot of gold bulls suddenly coming in saying, hey, i think it is time to buy gold by the way, this started in may. the l db was 120, now it is 143. 52-week highs. slv, 52-week highs today there's been some running that's already happened into this so i just want people to understand that, hey, look, are you buying a top i'm not saying it is the top, but i'm saying it is something that's been going on now for at least a month, in some cases two or three months. and to keep an eye, you have to be disciplined i took off all of my gtx today because i've been overexposed in these metals i don't want too much exposure there because at any moment if we get any kind of positive news in the market, i think we'll start to see the gld and the gdx and the slv, all of that start to pull back, if we see a big positive. >> pete mentioned the fed. president trump actually ripped

the fed during today's sell-off, calling the central bank clueless let's bring in steve liesman with that. steve. >> reporter: as you have been talking about it has been a consistent theme for the president to criticize the federal reserve nearly every day, but especially when there are big market sell-offs what he does not blame are his own trade policies which economists believe are weakening and looking to consistently be the market volatility. i will read you the tweet with the caution that it often contains significant misstatements. we are winning big time against china companies and jobs are fleeing. prices to u.s. have not gone up, and in some cases have come down china is not our problem, though hong kongst not helping. our problem is with the fed. raised too much and too fast now too slow to cut. spread is -- and i suppose he means here the spread between the u.s. yields and foreign yields -- is way too much as other companies say thank you to clueless jay powell and the federal reserve. germany and others are playing

the game crazy yield curve. we easily should be reaping big rewards and games but the fed is holding us back. we will win. >> the fed has typically not responded to any of the president's criticisms but for china and the u.s. to continue talking, there were no new tariffs on the table at the time if there is a recession, here is how the fed could respond. cutting rates would be an obvious thing. perhaps surprising, the market would get a little bit more effect to it it could obviously restart quantitative easing. it just ended tightening at the last meeting of course, there's the possibility, which some folks are talking about, of a reverse twist. you remember during the financial crisis, shortly after, the federal reserve acted to reduce yields on the long end. they could take operations to raise yields and reinvert the curve. i will say with caution that i have not had any support -- not heard any support from fed officials on an idea of actually

targeting the yield curve. we will get a sense next week at jackson hole just how seriously the fed takes the issue, an extent to which it feels a more urgent response may be needed. melissa. >> steve, joe was mentioning a 75 basis cut at the september meeting. you are shaking your head. >> i said maybe 50, and joe one ups me on the 75 >> if you want to surprise the markets, right, you can't go 50. 50 is sort of what is expected. >> it is what is expected, right? >> right. >> look, i think there's reason for the federal reserve to be cautious you guys on the desk are smart enough to understand that the differential on real yields is far less than the differential on the nominal yields with foreign banks. if you were to look at it, i think i looked at it this morning, it is about a 60-basis point differential because european inflation is so much lower than u.s. inflation. so there's not that much to go, not that much difference between the two.

the fed, of course, can surprise and can use rates. the question is do you use your ammunition before you're sure that it is really a very serious downturn as the market's expectsing here. >> why wouldn't the fed want to target a specific part of the yield curve? it seems like it would be so surgical and could be effective in uninverting the curve. >> so there's a long tradition of the federal reserve targeting the shortened and using the one tool it has, the funds rate. it stepped, i guess you would call it, out of bounds here, out of its normal role during an extreme moment when there were real problems and the federal reserve was desperate to try to kickstart the economy and used operation twist, for which there are really mixed reviews i think the fed really -- it is probably almost ridiculous to say this the fed wants to get back to its knitting of controlling the curve using the short end and using bonds. it wants to sell mortgages i think one of the things that's happening here is that the fed's dreams of getting back to normal are sort of going up in smoke.

>> yes, it seems that way. steve, thank you so much >> pleasure. >> steve liesman let's trade this tim, what do you think >> well, steve is pointing out that you have a dynamic where the fed certainly has a tool box it can go to, but the question is if we look at central banks has any of it actually worked. the good news is europe has a bigger spiral, showing people are looking at the relative trade which favors owning u.s. ten-years over german. one part we haven't spoken about the risk dynamics tonight is we haven't talked about the dollar, which to me is reasserting strength and is a bigger concern, because the next leg to fall is that emerging market currencies come under attack that is something we have seen multiple times throughout crises that have not necessarily by the way ended in emerging markets but ended up there. >> makes sense pete talks about being disciplined in the gold market i get it and he's right. this has been going on for longer than he each mentioned. the gold markets had the stealth

rally he is talking about. with that said, it goes right back to the gold market. i will say this and i'm not an economist and i will say it all the time, but there's a mythology that show lowering rates magically makes economies do better. tim alluded to this. it isn't working that well in europe and clearly it didn't work all that well in japan. my push back would be just because everybody else is going down that rabbit hole, why should we? i don't understand why it is the right thing to do. quickly, in 2011, july of '11, then citizen trump was talking about the fed keeping rates low, creating huge asset bubbles. he was right then. i'm not sure what changed in the last eight years. >> we have full coverage of the sell-off be sure to catch the special report "markets in turmoil" tonight at 7:00 p.m. eastern time up next, more on the mega market meltdown. where he sees a mancz market about to burst plus, where stocks are headed

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welcome back to "fast money" it was a brutal session on wall street today the dow having its worst day of the year and crossing below the 200-day moving average for the first time in more than two months joining us by phone is cornerstone macro head of technical analysis carter worth. carter, now that the below-the-key level, where do we head next? >> sure. so i mean i think it is important to know that the dow spent as much time above as below in the sense that moving average is really what is considered an automated trend line if you are trending, it really matters, if you are in a steep up trend or down trend what we know is that the market has not been trending. it has been stalling for the better part of 18 months while we went above and below the key levels, the internals keep slipping. by all accounts one has to say the june lows are in play. if you were to go down for instance as much on the dow today tomorrow, you are getting into those levels.

now we're not much worse than we were on monday's low a week ago. so the initial plunge that 6% fell off in four or five sessions and we have been backing and filling. we popped yesterday, news. now we have given it back. the churning i think is a normal process for the market as the individual securities continue to weaken. that's the issue the trouble like this never comes out of nowhere s .has been brewing. we know that european banks have been making lows two and three, four years, japanese banks, and yet the optics of the s&p was always the illusion, whereas every other aggregate, mid cap, small cap, transports, never were confirming and now it is all coming out in the wash. >> okay. so let's get to levels, carter, and home in on the s&p 500 you said new lows. you are saying we are going to test december lows so that would be, what, 2347-ish >> for us to go to the june low,

that's 2728, we close at 2,840, you can do it in an instant, that would be another 3.8% from here but ultimately, and the big subject is if, indeed, the december lows are in play, right, which is the 2,350, plus or minus level, this will all come out as being nothing but a bear market rally. we were never in the new bull and that's what the divergence was always saying. >> carter, thanks for phoning in on a day like today. >> you bet thanks, guys. >> let's trade it. show of hands. >> oh, i love the show of hands. >> that's a great game >> it is not quite a game, you put your hand up if you agree. will we test december lows >> by when >> in what time frame, melissa >> in the next six months. >> we, 2,350 >> in the next six months. >> i mean i know -- >> about six months ago we were at the lows. >> okay. let's play the game. say 50/50, we're split on the desk let's just say. you know, it is interesting --

>> are you -- hold on. >> where are you >> i'll be with pete. >> okay. >> this is shocking because pete usually leans towards the bullish side. >> but i read the paper. i have seen put buying i'm not kidding you, eem today, spider put buying. there are folks positioning for something. >> but the president, who has said all along the stock market is a benchmark, it is a report card for his administration. you know, at what point does he do something to try to get the thing back on the rails? he tried it yesterday, somewhat unsuccessfully i guess my point is will he do a marginalized or a half-baked deal with the chinese to get the headlines back on his side to me it is a real concern, on top of which do they intervene in the u.s. dollar, which is equally crazy i think. those are the things you have to be concerned about, what will the president do if it continues. >> and the half baked idea is with --

>> why wouldn't you do a deal? >> i think if you look it a china's playbook right here, first of all they are dealing with hong kong i think they have to figure it out before they have the 70th anniversary of the communist party on october 1st i think that's a big deal for them and where they're focused so they don't have any reason to get anything done. if we go to the december lows, which i do more than i do the dow, if you took from the day after elections or essentially the immediate election rally of -- so november 11th of 2016, to that december low, you had a market that's up about 6% over two years, which isn't terribly impressive, which would be not a very good show or a report card for anybody if that's your report card. >> let's talk about one sector that got creamed today, banks, xlf, financials, etf entering a vex, while s and p banking and regional bank slipped into a bear market. what do we make of the bank beat down it is held hostage by two things, the inverted yield curve and fears about growth. >> right to me the inverted yield curve

is a red herring when it comes to the bank. there's a perception that it is for the ten year, but it is not. flatter lower rate is less margin opportunity for the banks, but we have seen that nim kind of plateau even in the low rate environment for me it is concerns about the economy and this knee-jerk reaction, you know, lower banks, banks bad. i'm long banks it is a day painfully to be long i'm about as long as i have been for a while. i think it is overdone but absolutely could trade lower came into the year at 99 maybe, jp morgan for example, but i think it is overdone. >> i think what would be scary about continued movement in banks is that banks had regained the trust of the investment community, and i mean in terms of not just were balance sheets in a better place, in many cases record profits, but being run to be giving capital back to investors, dividend yields

between 2 1/2 and 3% before the financial crisis it was a place and a safe place to invest if you were a big institutional investor they are back into the banks right now because of those two factors, and i think that's what makes it significant right now it is very painful. >> last quick question to pete if you think we're area going to test december lows in the next six months, where are you on banks or your portfolio overall? >> yeah, when i'm looking at banks, i have three i'm holding, bank of america and citi and u.s. bank. i feel most comfortable with u.s. bank. but they're so cheap relative to the metrics we like to talk about and that's why i have them i feel okay with those but this is not a comfortable time to be in the banks. that's why i was curious if karen has as much exposure now as in the past. >> only by a -- >> i reduced my exposure to the banks to just those three at this point in time but if something were to turn, i absolutely would want to jump on them because i think they're too cheap. >> for more on the sell-off on the banks, head over to

cnbc.com you're watching "fast money" and here is what else is coming up on the show. a dire warning from a hedge fund legend. he says a massive market bubble is about to burst. he will tell us where he is seeing all of the big warning. and later, the retail wreck. macy's, kohl's, nordstrom all falling hard in today's sell-off why now could be the perfect time to go shopping for a discount "fast money" is back right after this

♪ welcome back to "fast money" a major sell-off hitting wall street today after the bond market flashed a big warning sign a recession could be on the way, the yield curve inverting

for first time since 2007. our next guest says there's a bigger problem brewing in bond land let's bring in ceo of morgan creek capital management, mark great to see you. >> hey, melissa. >> what is the bigger problem in the bond market? >> i think we have the biggest bond bubble we have seen in history, and it is starting to show signs of deterioration. you know, we have sautalked abot this since last fall where the markets are playing out very similar to 2000, 2001, 2002. in 2001 we had the mild recession and it was 2002 where you had the bond bubble explode with enron and world com i think the same thing is starting to happen here. you have so many corporate companies that are really overleveraged. they're been issuing debt to buy back stock and it is finally coming -- you know, they have to pay the piper now that growth is slowing and profits are falling. >> so when you are talking about a bubble in the bond market, you are talking specifically about sports or are you including the

ten-year on this >> definitely governments. you know, you think -- look around the world you know, german bunds are down at negative .6 japanese bonds are negative. swiss bond market's negative, out to 30 years. who could possibly believe that? it is just because the marginal buyer, the buyer of last resort, the ecb, is doing noneconomic things so u.s. rates are now following that and there's a lot of talk about this yield curve inversion. one of the things i think is very interesting is if short rates were where they should have been, right, if the fed had raised them to equal the nominal gdp back three years ago, we would be very inverted and we -- there would be no question we're on the verge of recession. >> mark, it is karen let me play devil's advocate on the corporate borrowing side rates have been very low for a long time. corporations have had a long time to get their balance sheets in better shape, so how would you compare where they are now to the '02 that you talked about

that was some widespread fraud maybe it wouldn't shock anyone to have fraud, but that seemed more of a catalyst to me than it would be this time around. >> well, i think you're absolutely right, karen, that there were sectors where there was real problems, telecom in particular look at certain industries, starting to see stress in energy and lending and look where oil prices are headed. there are a lot of very overleveraged companies that their equity could disappear the bondholders could be the new equity holders tesla, the equity could disappear because they can't pay back the bondholder. i agree with you, not the entire market, but certain companies. look it a pepsi and coke, mcdonald's, a lot of companies issuing a lot of debt to buy back stock i think it was a bad idea as we go into a weaker economy. >> hey, mark it is tim. so your forecast is certainly it gets nastier in 2020 based on

the debt dynamic what is the next shoe to drop? you are an emerging market's veteran. em has held okay where do we go here? >> i have to say i was agreeing with your commentary earlier that em has really been much softer than i would have anticipated in the past few months you know, prices were cheap and they started to rally and all of a sudden they got cheaper. you look it a something like argentina, you know, just the viciousness of that correction earlier this week. so i'm a little more nervous about how bad the global economy is i mean think about it. there are 15 economies around the world where the 30-year is below fed funds in the u.s so the global yield curve is very, very inverted, and that's usually not been a good sign historically. >> mark, one quick last question that is, you know, in recent weeks a lot of people have been making a big thing about bitcoins run higher and the correlation it seemed to have

with global turmoil. things seem to have gotten worse and bitcoin also turned lower. should we throw that narrative out the window or at least table it >> well, look, i have been saying for a long time that, you know, people who watch the daily price of bitcoin are really missing the whole point, right the whole idea of bitcoin is it is a store of value. it is a chaos hedge or schmuck insurance as i like to call it what we need to think about is the long-term trend. every year the low is higher, the value of the network goes up so to worry about day-to-day valuations in prices really misses the major point, which is you want to own a piece of the network. you want to have one, two, three, 5% of your net worth in this asset as a hedge against all of the problems that we see in the fiat markets and in the equity markets look, equities are very overvalued, bonds are overvalued it is tough to find an asset that is undervalued. >> right. >> the only one i can really

find is volatility, and it has become less undervalued in the last couple of days. >> mark, thanks. >> thank you, guys appreciate it. >> do you agree with his commentary about bubbles >> yes, because when the genie is out of the bottle with this rate thing, rates are going to explode to the upside. that's a real concern but for a different show i will say this to play the other side, if there are real concerns out there, which there clearly are, they're not manifesting themselves in the high yield etf down less than 1% today. when that starts to crater you get worried. it hasn't happened yet, so at least for now high yield might be telling you a different story. >> is schmuck an investment term >> i'm not sure. we can look it up and see what it says. coming up, the retail rack macy's having its worst day since january. we will tell you what the sell-off could mean for the group as it heads into earnings, plus a big bet on volatility one options trader wagered nearly $1 million that the market madness is stju getting

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♪ welcome back to "fast money" we have got an earnings alert on cisco. that stock is down more than 7% after hours. let's get to josh lipton in san

francisco with the details josh. >> reporter: so i caught up quickly with rbc's mitch steves who covers the name. he basically the important stuff was in line, but the guidance mitch is saying weak on both the bottom and the top that tells us, he says, more broadly that overall i.t. spending could be slowing down here, too. on the call right off the top, ceo chuck robins was asked about the guidance and he picked off a couple of different themes one is continued challenges in service providers, so that would include your carriers, traditional carriers, mobile carriers america is basically the same. europe was positive. asia though continues weakening. i did see indications, chuck robbins saying, of macro shifts we didn't see in the prior quarter. not as strong finish as you would expect to q4 he said he was amazed by the resilience of the economy and hoped it can bounce back with resolution to some of the issues on china he said they saw a significant impact on the

business in china as relates to what is going on with the trade war right now. overall china not a big part of cisco's business but can have an impact they sell, for example, infrastructure to carriers in china. they've been uninvited to bid or participate as they used to. on tariffs, they said they continue to do everything in her words they can do, confident they're able to offset the headwinds from tariffs with the continues benefit from software. tomorrow be sure to tune in to cnbc ceo chuck robbins will be on cnbc on "squawk on the street" fielding questions about this report and i'm sure much else. back to you. >> thanks very much. josh lipton in san francisco pete najarian, what did you make of the quarter >> it is a name that absolutely had a screaming move to the upside since we started the year i can see and understand chuck robbins last quarter said, you know what, i don't think china will be as big a trade deal, blah, blah, blah, he was open about it. >> and rerouted the supply chain. >> right

and 25% of the revenue has pulled back in china. >> genius. >> i would say this. i love the name. i think it is inexpensive. i think a lot of different positives could come out, i wouldn't jump on it now though despite the fact it is down 7% when you look at the gains i would wait longer to buy this thing at a better pe level. >> it leads to things you have been asking since last week, as we get into september, october, are ceos going to cut back on spending maybe the cisco guide is one of the first salvos into what you are talking about. >> are we going to look back and say that cisco ceo was on to something? >> you were on to something before the cisco ceo, so well done by you, sister. but to pete's point, the stock is cheap if it stands alone you say operating margin were really great. but they telling you things may not be great going forward, it is concerning. >> here is another earning story. shares of macy's touching the lowest level on weak results

macy's posting a huge miss on earnings, splash guidance for the year, taking down a number of other retailers today including kohl's, nordstrom and the gap. retail sitting in a bear market, down 27% from the highs. so this is the beginning of more pain for this space? karen. >> so some of us went through and red the transcript normally i like to listen to it, but it had a different nuance. anyway i read the transcript a lot of what happened to macy's was ideo syncratic and a big miss they blamed it on inventory they were too heavy in and they had to mark down to be able to move it to come in to be in a better position of inventory going into this quarter that was sort of on them they highlighted some of the reasons, some of their own private label brands didn't sell well they missed. so that i think is specific to them they also had a gross margin miss on the delivery of being an online retailer, that

transformation it is not only their problem, right? that's a wider problem i am sort of -- the stock actually opened even lower than where it closed. it actually rallied almost a buck by the end of the day from its worst level. it is sort of amazing to me. i think the yield now is over nine all of that having been said, they seem to be flailing around, trying to find things that work. good for them for trying to find things that work, but i would rather they have things that are proven proven to work which it doesn't seem they do yet. >> the comp is really tough. when you look at the gross marging pressure, that was the big deal the fact it sets a terrible tone going into apparel season, for the company that people would like to see different but as karen has pointed out, i mean, these guys are going through a painful transition it doesn't necessarily mean higher gross margins, but for macy's, i think it is a turn around there's expectations of a major hockey stick in the second half of the year obviously holiday season is what people are betting for. >> walmart and target seemed to hold up better than the pack. >> doing pretty good

target is one of the names that's been really well. i think the names are in a different spotlight than the names we are talking about, talking about macy's and nordstrom's which cannot find its way out. the last couple of quarter was awful. it seems like something weird is going on there because they want to buy back their tone company yet every quarter they do worse and worse, which you can read between the lines what i think right there. >> right. >> i think there are names out there trying to do things that will be very, very interesting in the future. target and walmart are actually executing because they had a better vision of the fiegs. >> coming up, volatility sweeping the market today as a major sell-off slams stocks. now option traders are betting on more wild swings ahead. we will break it down. we are a few hours away from markets in asia opening. eras today's sell-off spill we will take you live to singapore for the setup. don't go anywhere. much more "fast money" right after this are awaiting the mar

the asian markets. will today's sale off spill overseas hi, srijegareh. >> it looks as though we're going to get smoked this

thursday the futures are implying a 500 point decline for the nikkei when we open japanese markets will be a victim of the success of the japanese yen as a safe haven, the dollar/yen trading below the 106 handle it is worth pointing out that, again, risk off today is only going to be aggravated by what we are seeing in terms of the global picture europe, emerging markets, the conversation on kbrebrexit and kong and the stronger dollar, all will be additional pressure points on sentiment and our markets. expect a bruising day ahead for the asian session. it looks as though it will provide food for thought for the fed. also, the great and good and the central bankers that will be gathering in jackson hole later on this month. it looks as though they're going to have to circle the wagons back to you now, guys. >> sri, thank you. tomorrow what are you watching for? >> although i think smoked is a financial term

sri used it well. >> definitely well-used, yes. >> if you think about u.s. markets on some level have been following the asian pain if you think about where japan is arguably outside of germany kind of the global export play, i think what we have to see is some healing there it is not going to come straight there. we have an industrial production number coming out. i don't think we're going to hear it any time soon. we have forgotten about the yuan for the last couple of days which i think has been a friend of the market and investors need to watch. >> yields have been a driver of the action as well. >> probably will have it, like we put the bit kerry barrecoin you call thing in the bottom corner. >> the yield curve. >> you have to continue to watch the gold market for sure ask yourself, i think it is an important question, brian brings it up all the time, is it a currency war or is it a currency crisis i will say it, you better hope it is a war because if it is a crisis we got bigger problems

than just dow down 800, folks. >> karen, what will be on your screen first thing in the morning? >> probably a sea of ready guess we could be looking at or a turnaround thursday maybe i have a list of stuff to buy, but i won't be buying first thing. >> up next, the dow dropping 800 points in today's sell-off and one trader bet nearly $1 million that the market madness is just getting started. plus, take a look at the cramer cam. jim is talking about where to put your money to work after today's big sell-off t t o coming up on m"mad money atheopf the hour live from the nasdaq market site overlooking new york city's times square, much more "fast money" still ahead

we have a market flash on pivotal software vm ware in talks to buy the firm pete, just quickly, you were talking about -- >> this has been talked about a little here and there. pivotal has been in the news for a while. wow, it is an amazing number because gifrpven where the stoc was, it is amazing. >> the dow plunging 800 points today. one option traders is betting near $1 million that the wild

swings in the market could get wilder make khouw in san francisco with the action hey, mike. >> hi there. it was a pretty wild day in the options market we saw over 27 million contracts tradov trade overall, about versus 19 million versus the volume. many trade were in the vix index. i was looking at the september 30, '35 call spread, somebody played a little over $0.30 for 26,700 of the call spreads which could potentially be worth $5. i think the important thing to think about here is not just someone is betting that the vix could go above 30, because the underlying instrument for the options is the vix future. what happens is when you see a lot of volatility, the vix curve ends up in backward. spot vix will end up even higher for example, these specific futures traded under 20.5 at the close whereas the vix spot was 22 and change. a bet that the future rises above 30 is a bet that something pretty wild is going on in the

marketplace. >> yes pete, you were mentioning some of the action today. >> yes, today and recent days where we have seen volatility of people coming in and we talked about the january calls as well that were being bought in the 30s. so when people see this thing moving the way it is, and it is up 25% today, 26% today, i think there's a little bit of fever that goes on that says, you know what, maybe we're not done yet, maybe there's more to come maybe a blow off top for that matter. >> in the vix. >> yes. >> but, again, what was troubling to me today is to see the vix around 20, low 21 handle, in an environment where we really have so much systemic risk on the table. the one thing also about in terms of the bond market moves, ctx -- i don't want to get too deep into this weird rabbit hole, but highly levered players are playing -- typically they play the bond market and they play the bond market for it moves a couple of basis points and lever it up. the duration risk going on out there has been extraordinary, but we haven't heard about hedge fund blowups which, again, there's a lot of credit exposure there and something to be aware

of. >> also when you take a look, when you see volatility going higher, you think things are getting more expensive in terms of options. >> yes. >> some people might say, time to insure the portfolio. >> well, what it is not time today. today the house is on fire, right? i mean not that it couldn't entirely burn, it could, but, you know, i don't think this is the time to buy. they were giving them away. >> two days ago. >> not two weeks ago >> even two days ago when we had the spike. >> yes, it was 16. >> it was the time to be getting obviously. >> so i mean it is -- yeah, sometimes i say sell puts. i never naked sell them. i am only selling ones i'm already long. >> right so you own the stock. >> i don't believe in that, or own the put and sell that. >> mike, for somebody that wants to insure their portfolio now because finally they've gotten nervous, what would you recommend? >> well, you know, it is interesting. so when options premiums go up it tends to lift all of them if it is really a disaster that you are concerned about, choosing out of the money put spreads that are relatively tight strikes but still trading

for very good pay-offs, so five to one or six to one, you can allocate a small amount of your portfolio to something like that, and that's actually what this vix call spread buyer is also doing it could be worth $5, spending $0.30. a rice above 30 is a disaster and that pay-off will be needed if we see vix levels at that high price. >> thanks, mike. mike khouw in san francisco. for the full "options action" show tune in this friday at 5:30 p.m. eastern time. coming up, final trades. what do you look for when you trade? "options action" is sponsored by -t. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade.

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♪ final trade time pete najarian. >> i have to tell you, i am looking around it is very difficult but i saw some call buying in a chinese name i bought that stock today. i'm selling. >> starbucks, china. >> yes. >> tim. >> i think today you take some safety in snacks i think the snack business of pepsi is very defensive at a difficult time probably small relative value pickup over coke. >> karen. >> tomorrow after i wait and watch, the first thing on my list is united rentals calls they've been crushed and i think there's huge value there. >> big special coming up, mel. >> is it >> big. >> pretty big.

>> 7:00 p.m., an hour from now. >> yes. >> i will tell you, although nothing is imper srious to the market sell-off, i believe amgen. >> we will see you back fo my mission is simple, to make you money i'm here to level the playing field for all invest tors. there is 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 trying to save you money. my job is to entertain and teach you like days like today call me or tweet me @jimcramer how do you get your head around a day like today