16.45 and 16.65 billion. he said also will closely watch billings growth, his bogey there 19% growth year over year. that metric gives investors insight into how much new business the company is securing back to you guys. >> josh, thank you that does it for us on the "closing bell" >> "fast money" begins right now. ♪ live from the nasdaq market site overlooking new york city's times square this is "fast money" i'm melissa lee. the traders on the desk are pete najarian, tim seymour, karen finerman and steve grasso. the great american consumer to the rescue again retail stocks surging into today's session, target handing in its best day ever we are keeping an eye on share of elle brands and nord strzok, on the move after recording results. nordstrom's conference call is getting under way. we will break down the highlights we begin with a big move late in the session in the bond market, another possible recession signal being shot as the yield curve inverts again. we have had two inversions in a

week, it is like inversion wednesday is here. are things different this time around, pete, because this time stocks barely reacted. granted, it was fleeting but we are ever so close to the inversion. >> that's true but the reaction i think does speak something about what's going on in the market right now, and i would also add volume yesterday, volume today, at least in the derivatives world, has been absolutely depressed. steve can talk about the nyc, but we are seeing volumes that were unbelievable. we are talking about 7 million per day over average is what we've been seeing over the last eight or ten days. so it is amazing how much volume we are seeing. with that volume it gets interesting, but the last two days, the light volume is concerning it is almost as if everybody said, you know what? maybe we'll take the last week of august off. we will pull back a little bit, off of all of this maybe the inversions are not as dramatic. >> i would have thought that the inversions, the reaction to the inversion could be more dramatic. >> right you could say that it certainly is bufrd with fantastic retail earnings in the last week. there's a number of bellwether

companies. we had retail sales also a week ago that came out at 1%, which was expected to be .4. you blew it away you have insight into the consumer on the lower end of the supreme court tum th spectrum which seems to be healthy. my view is the equities respond differently based on expectations of earnings and because we had a very good environment, whereas when we inverted -- you know, we inverted in march and equities didn't care yet they cared a month ago. >> how about how many people told us, tony dwyer tells us all the time recessions happen is it 18 months, 22 months after the inversion? >> yes. >> why are we worried about it we are worried about something that potentially happens a year and a half later or two years later or it could be different this time. i know those are famous last words. >> right and what did we see last wednesday, the last time we saw the inversion? we saw a major sell-off. >> major sell-off, and people become immune to the sell-off or pani panicky situations and they say, okay, one good head lied out of trade, one good headline about

the market moving higher. >> what is different this time versus last week are the retail numbers we have seen, the strength of the consumer if you are a believer that the consumer can carry -- the numbers say the consumer can carry the economy, then maybe it is enough to say, you know what? maybe i'm not worried about an inversion that lasts five minutes or however long it lasts. >> especially -- i don't know why the inversion is happening to be honest there are so many weird things going on in the global yield or lack thereof, negative yield, that i don't know if it is a tell that's no longer a tell because we're in such uncharted waters to me i like to look at earnings, obviously it leads us to the retail numbers today. the consumer is employed the consumer's wages are going up their gas prices are down. their mortgage payments are down that's a lot of really positive things going on for the consumer we are a consumer-driven market so we should be rallying. >> we could have an industrial recession basically and the consumer is still thriving, and the one that hasn't reacted to

it have been the homebuilders. even though the homebuilders have somewhat performed okay, we are starting to see people come back into those. rates are moving lower people are buying homebuilder stocks again. >> to karen's point, trump today was making some comments and he said basically we are competing with germany what did we see from germany today? for the first time them selling negative yielding 30-year bonds. and it didn't -- it didn't go so well. >> go figure >> you wonder why there's demand in u.s. treasuries, it is because what else are institutions going to buy? >> i believe that u.s. treasury yields are being pulled down by germany, and i believe that europe is really the epicenter of where the greatest concerns are, where i think there's not as much policy, you know, opportunities in the tool box and i think where there's more political discord. at the end of the day asia can do what they want. china can do what they want. china has an enormous amount of flexibility in my view despite the limitations of their economy. so i think it comes down to also just market, once again,

positioning and perception when we went yield curve, everyone lost their head everyone acted like it was the end of the world when, in fact, it didn't change the dynamic for the u.s. economy the flip side today is i wouldn't say everything is so great, let's not worry about it. you have the same dynamics, global pmis, some of the ones that came out this week including those in germany today, awful i think we have to be concerned about slowing growth i think the u.s. economy is slowing, but the good news here is that it is not going out of business i think that's where markets have come to and that's healthy. >> look at target and lowe's today. target and lowe's, does that paint the picture of the strength of the u.s. consumer or are they idiosyncratic stories. >> i think it is a combination of paints a picture of the consumer having strength, but i have to say i think there are names out there, mel, where it starts management, fundamentals, are they executing, and those absolutely are today everybody is patting brian cordo on the back. they should be they should have been doing it in january when you go back to each quarter over the last three or four and his excitement about the

consumer and what he is seeing, a and his vision has been far more correct than many of the others who were saying, look, we're seeing negativity going on now. brian ned said that. >> right. >> brian talked about how bullish things are that acquisition of ship for $500 million was absolutely brilliant. that's a year and a half ago that they made that. >> and that's only 500 million. >> it is unbelievable. lowe's also, the fact they're making inroads the ceo is now actually turning the corner, something i didn't even know they could do. it seemed to me home depot owned it and that was the end of the story, but it looks like ellis is turning this and home depot is getting some of the pro business, the paint business, and some of the areas it has been absolutely dominated by home depot it doesn't mean both can't win. >> by the way, target has been talking about to your point traffic off the charts. >> off the charts. >> for months now. now online, up 34% they're clicking on groceries, they're clicking everywhere they need to perform. they're performing. >> i mean target has done a

great job, and there's a lot to like about this quarter. the thing that's most important, it was the most interesting to me is how much the stock was up and why. so let's look at a chart we have of target's pe today target found a new pe ratio. all right. we don't have a chart? we do. okay look at what happened to the pe ratio today. target was sort of a show-me story, show me, trading in discount to walmart's pe it is still at a discount, but today they -- you know, the market finally decided, all right, target is definitely a survivor they're doing a great job. you hit a lot of things that they did well. this rerating is actually pretty interesting to me. it was up more than i thought it should be actually i did sell some upside calls against it i feel like it was just a little too much euphoria. great for them i'm still for sure they're doing a great job, but this was interesting to me. lowe's also up a lot they did some really good things there were some questions about their ability to execute they seemed to put some of the questions to rest. good for them.

home depot, up today. >> again. >> which was off home depot being up. >> they used to trade as one block. now you have walmart performing, target performing, and you also have costco performing so there's ones that have the leverage over the suppliers, whether or not the tariff situation gets any worse or not. >> right. >> do they have the ability to haggle with suppliers? and those three names have the ability. >> well, what target was able to do was improve the gross margin. i think that's a lot 32 basis points in gross margin means you're going to rerate i would like to say i'm not wrong on target. i would like to say i certainly don't think i want to be in big box retailers. i think it is a place that's overly crowded target traded at a massive discount to walmart, which is also rerating. how do you explain this? some is a function of where we have taken the conversation, which is the consumer is healthy enough to support and where are they shopping in the consumer is spending a lot of time in

walmart and target clearly if the companies are run better -- >> pete spends whole afternoons. >> i can tell you this, and here is the huge difference and we have to point it out, i think it is important when you look at walmart and target what are the margin difference they're different stores when you look at the composite of what walmart is, we are talking more groceries, 50-plus targets, but target is 20% i think that's the huge thing. you talk about margins look at the profits. the profits being up, the operating margins are absolutely incredible for target, and they just continue to execute they made hard decisions, mel. they had to close canada, and it is just like lowe's. what are they doing? they had to close stores that were not performing and those are not easy decisions to make, but these are eceos making the tough decisions that need to be made the $7 million remodel scheme for target has been a home run. >> here is my question the consumer looks really great and strong. >> are you building up to a

would you rather >> no, no. why does everybody think that? >> we have the graphic. >> i have other games in my quiver it is not a game it is simply a question. >> it is serious, not a game, guys. >> a serious question. we were talking about germany. we were talking about woes around the world at what point does the consumer get impacted by what is going on around the world or is the u.s. consumer strong enough to actually withstand what is going on i bring this up because there's an interesting note from morgan stanley this morning entitled "wheels for slow down are in motion." and their argument is that the u.s. cannot be immune to what is happening around the world and there will, in fact, be catch-up and an impact on consumption. >> okay. that's a serious question. >> it is a serious, serious question >> you guys want to play the game >> is the consumer employed? what are their prospects for employment, right? do they feel like i have a good job or i could get an even better one, which is what they all fell now, right? >> right. >> i think it is the absolute

linchpin i don't think the consumer cares about the two year, ten-year spread. >> i don't think so either. >> i think ceos, if they start to care and go back on the employment that's the number one thing. >> but we have seen them not spend on cap ex or business investment we have seen that slow down dramatically. >> i think you will see the same way we kicked it all off with, does the yield care matter, does it matter this time, are we going into recession the consumer doesn't seem to care now i think you will see ceos investing through it it is like nascar, you go for the accident, you don't try to avoid the accident i don't think they -- i think they're going to start to think that they don't care >> nascar? >> that threw me off. >> they know or they're starting to think, hey, we've pulled back on the reins a little. we're still worried about this, that and this, but you can't wait forever it is like money managers. you are paid to invest ceos are paid to run companies they have to run the company, whether it is --

>> a plant in ohio now no matter what >> they'll start having the conversations that apple had with the president saying, hey, look, you are giving samsung an unnecessary advantage over us. they will have to have those conversations. >> not every ceo out there is tim cook. >> not everyone is tim cook, but they're going to have to invest through terrible environments, good environments and mediocre environments. >> if you look at the rest of the world and how the market responded last year, same thing was going on we went through the summer kicking butt against the rest of the world. the trade turned suddenly in october when we started to see data points in this country. the fed was part of it some sense that they -- >> the fed was all of it. >> well, it certainly played a ro role. >> we had weakened earnings and conference calls that caused concern there. >> yes, but it was trade and the fed, and then the fed really -- >> and data points. >> yes. >> anyway, to whistle test the graveyard in this and say we're

totally immune is -- i know it is a global economy and not as global possibly, we are a lot more immune. i think that core inflation is printed north of 2% for eight or nine months in a row we do have inflation in this country. to think it won't feed through to products, a lot of the retailers have been eating it. walmart can do that. walmart can do whatever they want in terms of pricing not everybody is walmart. >> yes let's pose the same question to a man who would have an idea. he had his finger on the pulse of the consumer for many years in the retail space. joining us on the phone is steve sadove, the former sax chairman and ceo. grade to speak with you. >> great to speak with you. >> how much can they weather with all of the global turmoil happening? >> it is interesting listening to you guys talk it through. the reality is the consumer is already slowing. if you call it the mastercard spending data coming out of last year, it was growing 4% to 5%. now it is growing 3.5%

you are seeing a slow down of the consumer if you see a slowing down in europe, it is going to slow down further. i think the real question is who is going to win and who will lose it is a little harder to win in a slowing consumer environment, but you have a lot of retailers -- the ones you were just talking about -- who are blowing it out of the water. you have winners and losers. it is going to continue to be even more exacerbated, and you have three factors in my mind that drive whether you win it is value, convenience and experience you take somebody like target or walmart, they're doing a terrific job on perhaps all three of those and when you have the omni channel investment, you have bye online, pick up in shore, pick, deliver, same day delivery, those are the variables causing companies to win what is happening is that it is an upward environment. i think the u.s. consumer is strong you talked about confidence, unemployment, gdp rate, the real wage growth. those are real and the consumer at 70% of the economy is very --

is healthy right now if you see a slowing economy, which i think you will see if you get a slowdown in the rest of the world, it is going to make it even tougher but i do think you're going to continue to see the visionaries like the brians who have made choices and investments, they're going to continue to win. >> how do you -- how do you assess the president's stance on the trade war? i ask you this because the president on one hand says that china wants to make a deal but he's in no rush to make a deal, which makes it seem like the trade war could be protracted. on the other hand the president seems to acknowledge that the impact of tariffs, particularly on the consumer, could be deleterious to the economy and he postponed them until december 15 if the trade war gets prolonged, that december 15 timeline will come and go and those tariffs will, in fact, go into effect. so how would you sort of navigate that? >> well, i think this is a difficult one. the tariffs are a tax on the consumer, and longer term there's only so much that the supply chain or the retailers or

the suppliers are goingto be able to absorb it is clear that the large retailers have been able to either through negotiations with the suppliers or absorption of the increases absorb much of the tariffs, the 10% we are seeing right now. but you had companies like macy's talk about the consumer won't pay more, so you will have a difficult time absorbing i think the 10% you may be able to get away with. but if you go higher than the 10%, i think there's going to be an impact on the consumer. you will see an impact on jobs so it is going to be difficult for retail i do believe that the -- you know, the points in terms of trying to get at intellectual property theft, some of the concerns that we have with china behavior are absolutely real and the right things to be addressing but we would be kidding ourselves if we think it is not going to longer term affect the consumer i don't think you are going to see the big effect this fall season it is minimal because a lot of the product, some of it is delayed until december, some of it is just hitting now

it is going to hit towards the latter part of the holiday season, the 10%. but over time as you go into next year it is going to disrupt supply chains. you are already seeing companies source differently, and you will have a long-term effect. >> steve, great to speak with you. thanks for phoning in. >> happy to do it it >> steve sadove. 10% is the line in the sand. as an investor, how do you think about investing in macy's or a department store any retailer that may not have the wherewithal to absorb tariffs. >> well, again -- >> it is like an artificial deadline hanging over you. >> i think we have done a decent job of saying not everyone is built the same in this environment, and so we recognize that the department stores are going through a change that looks like it is a point of no return at some point it means the business is changing but i continue to believe that there's going to be no way to hide from price increases that are going to be passed through to the consumer, and then we really have to see what the

consumer response will be. so far they really haven't had a chance or had to adjust here. >> target seems to have some cushion. they increased margins despite higher things like fulfillment costs. if you think it goes above 10%, the tariffs, would you still be invested in target >> well, yes, i think i would. because if it is 10%, that's on their cost basis, right? and the wand has moved a little, so that actually minimizes a little bit, right? that's just on their cost. so let's say they mark things up, you know, 50% or 100%, 50% margin, that's a 5% increase there's still a little room there. >> at 10%. >> yes. >> but anything higher >> higher, we will start to see inflation. coming up, it could be one of the biggest corporate settlements in history the key ruling expected in the coming days that could set the tone for thousands of opioid cases. why the outcome could send shock waves through the entire drug space. later, west wing's message we have heard mixed messages from the white house in 24 hours

on everything from taxes to trade. we will break down how the investors can navigate the moving market compontsen much more "fast money" right after this

welcome back to "fast

money" johnson & johns johnson & johnson could set the stage for other similar lawsuits against drugmakers meg tirrell has the details. >> it could involve dozens of defendant companies and thousands across other states. it was brought by the state of oklahoma seeking to hold the companies responsible for the oi opioid crisis. the judge's decision monday afternoon, analysts say, could have a major impact on stocks of other companies facing litigation, perhaps even more so than johnson & johnson itself given its size check out the mark cap losses we have seen in the names, teva, endo and mallinckrodt. it has weighed on share prices that's because of the sheer size and complexity of the opioid

litigation oklahoma is just one state of almost all of them that have filed lawsuits against drugmakers and distributors, and they're separate from the more than 2,300 cases brought by cities, counties and others consolidated if federal court in ohio if no overall settlement is reached there, the first trial in that group is set to begin october 21 that's not all either. the department of justice is pursuing penalties laying in a 1.5 million dollar center from reckitt benckiser. overall some say a settlement could top $100 billion if the companies are able to ban together to reach one. melissa. >> why is johnson & johnson going to trial as opposed to settling as we heard other drugmakers do? >> i heard from folks in the space johnson & johnson does this they sell band-aids, tylenol,

baby proud powder. they're a family company and don't want to be associated with it. >> it is a peak name but i don't like the headlines. >> opioids, take clk. >> because of that i'm not in it right now. i would like to stay on the sides right now of the opioid thing. when i look at teva name, it has been a warren buffett name for a while as well where we see this ever-sifting, lower-type of a thing and there's pressure, there's headwind i would rather be places where at least i understand the story much better in terms of what sort of risks do they have in front of them right now. i look at merck right now after the big pull back, we talked about it earlier, but after the big pull back look at the resurgence in the stock to test towards the high again i think there are names you could be and avoid the opioid thing. >> doesn't it give you peace of mind, when you look at the

settlement, admitting no wrong doing. obviously it was oxycontin, a different beacthing. look at j & j. >> you are a buyer >> i would be a buyer. >> even though you have seen the stock contained with the med lines? >> you have seen it with multiple headlines you had talc before that i would not be a buyer of the space not because of the lawsuit. i'm not a buyer because we're going into an election where it is a bipartisan issue, where there's tremendous headwinds on every front for the whole industry. >> all right you can read the latest on the coming opioid trials at cnbc.com you are watching million on cnbc here is what else is coming up on the show. a retail race rolls on, what you can expect from gap when it reports results after tomorrow's close. but first -- >> pete is stepping up to the plate with a new fast pitch. the one stock he says could be a

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welcome back to "fast money" wall street suffering from west wing whiplash. over the past couple of weeks we heard the president reverse course on everything from taxes to tariffs eamon javers is live at the white house. he has been covering all of this back and forth and back and forth. eamon. >> reporter: yes, and there's been a lot of back and forth, melissa. take a listen to the president on a couple of topics, particularly as you say taxes and tariffs just over the past week or so it has been head snapping. here is what he said >> payroll tax is something that we think about and a lot of people would like to see that. >> i'm not looking at a tax cut now. we don't need it we have a strong economy. >> a lot of people have been

talking about indexing for many years, and it is something that i am certainly thinking about. >> i'm not looking at doing indexing, and i haven't been seriously looking at it, but certainly it is an option if i wanted to. >> the tariffs are working and they're eating the tariffs, by the way. there's no price increase. >> we're doing this for christmas season, just in case some of the tariffs would have an impact on u.s. customers. >> >> reporter: the president said he will step in and try to do something to help apple because apple is pairing the tariff on one hand he said americans are not bearing the brunt of the tariff, but on the other hand he may take action to benefit tim cook after tim cook made the argument to him. i'm told the staff briefed the president in the oval office just before he came out to talk to reporters about his tax comments and how much pickup they've gotten and how much

speculation they said off over what the tax plan would be at the white house. the president then went out to talk to the reporters, me included, determined to shut that story line down and determined to say that he's not doing anything on taxes. so maybe inadvertently speculating in front of the cameras yesterday set off a tsunami of speculation the president wanted to shut it down and be clear he's not actually doing anything. >> thank you, eamon jacksonvilles, joining us from the white house. you know we're not a political show we look at politics in the price many of investors and how investors should view the markets. these are mixed messages these are statements that could have an impact on investor sentiment, on consumer sentiment, on the markets themselves, and they are very confusing, steve. >> i think that this is all part of how people invest through these environments. >> the analogy with the car crash, keep driving thing?

>> go towards the accident if the president says something on tuesday and he changes gears, how do you invest on a tuesday and different on a wednesday you stop thinking about it i think it helps investors see through the cloud. he says one thing one day, one thing the next. >> let me take the flip side. >> which flip side his or mine? >> okay. so let's say though you're not an investor. you are someone who is importing manufactured goods from china, right. okay you can't just drive through it, right? because you need to know how much you're going to pay or you need to know, are we ever going to have a trade deal do i, can i move production somewhere else do i start doing that? >> do you have to import those things >> let's say you can't make them in the united states. >> how do you trade? how do you trade on a normal day basis? you are a hedge fund how do you trade you make your bet. you don't buy 100% of your position, you buy 25%. if it is right, you lay in

another 25%. same way ceos do it. >> i don't know you have the ability to up and down your capacity, utilization of some plan -- >> they eventually have to import it, right after three months of saying, let's wait, let's wait, he picks up the phone and says, guys, we have nothing to sell. >> and it depends how long the lead time is it is not like you can flip it around. >> sure, you see inventories like we saw with cjx you see inventories grow because they got ahead of the curve. >> there is an uncertainty -- >> i don't think it is a difficult debate to say it is difficult environment for ceos to do planning if you look back on the market, since august we have had four runs either down 4% or just under, just in august alone. that tells you that the market is obviously responding. what i would say to that is, look, the fundamentals haven't really changed at all in august. i think that's what people need to keep their eye on the ball, other than possibly bond yields.

>> pete? >> i would say quickly that you have to look through the distance of this whole thing i think that's the point you are trying to make if you smooth it out and invest the way you have been, you are not going to get jerked all around, up and down and that's the way to do it. >> coming up, we are keeping an eye on nordstrom the stock is surging on earnings that call is wrapping up soon. we will tell you what the ceo had to say, that is moving the stock in the after hours 10% steve is stepping up to the plate. he has a sizzling stock that he says is headed for breakout. find out the name when "fast money" returns do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

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welcome back to "fast money" it has been a while since one of our traders stepped up to the plate and gave us a fast pitch who better to dish out a home run than our pete najarian at the plasma take it away. >> i'm giving you medtronic because i like what they're doing with the company and what transitioned over the last eight years or so since they hired the new ceo from ge. he has done a magnificent job. he has made the move to ireland in terms of some of the tax ramifications there. what they're doing within the company is the aggressiveness of the money that they paid, they're giving themselves back they're actually paying off the debt at a very rapid pace right

now for that acquisition of covidian in doing so they're buying back share and giving you a 2% dividend so i think what they've been doing financially i think makes a lot of sense the last thing i would like to say, you take a look at the stock and say, wow, this thing has been on an absolute run. if we pull up the stock you can see it is literally trading towards the highs but still trades at about 19 forward pe. this is a company that's absolutely the cash flow is incredible it is at a growth pace of about 20%. what we are seeing in the company is a company growing into itself. if you listen to the call today, the ceo talked about 2020. that's where they are now. this is q1 now 2020, he is talking about the idea in the second half how much they've got in the pipeline that actually will feed into the company. i think because of that, despite the fact it is trading near its highs, this is a name you can still own. i own calls in this name we had huge activity in there today. twice it hit in terms of unusual activity i think it is a name that be a absolutely can break out to the upside. >> pete, why do you think that

the device space in this sector is immune or can survive or can perform better than a lot of the other tentacles, whether it is up or downstream from them >> i just think there's a much more smoother process, steve i think it is something where it is not nearly the volatility that you see in some of the other ones, where it is just focused directly on a cancer drug or all of the other different types of drugs like that because of that, it gives them a little bit more of a smoother way of looking towards the future i think that's exactly what this ceo has tried to design with this company, is to make the process a lot more easier to evaluate for all of us when you look at this, it felt a little bit like it is a little toppy in terms of the pe, but like it because when you go forward you see the growth that's going on right now in the company, i think the potential is this thing is actually cheap if you look back a year from now. i think you will look at this company as too cheap at this point in time. >> pete, do you think the company is a victim of its own success? the comp on this for fiscal q2 '20 versus q2 '19 is almost

too tough. for a company talking about growth of 4% it will be tough to do. >> it will be tough, but i will say this when you look at revenue growth and earnings growth, and i think going forward their growth has been absolutely spectacular. but you add the pipelines i'm talking about, they have multiple different issues that will be able to come out over the next year, i think that's the part that has me the most excited right now. >> are you buying pete's pitch on medtronics? steve grasso >> i'm going to buy it. >> wow. >> pete, you said it before. they're domiciled in ireland the corporate tax rate there 12.5%. that's a huge tail wind. buy, buy, buy. >> karen >> i could never bet against pete the value makes it -- >> i did not sugar coat it. >> it if came back to 100. >> a path is a sell. come on. >> anyway -- >> i'm a buyer so it doesn't matter pete wins, i think the guide at 4% is conservative i'm with pete. >> that's a great pete, by the

way. very realistic that almost looks like a photo two buys on the desk and one pass that's what's spoken are you at home buying pete's pitch for medtronic. vote in the twitter poll and we will reveal it later on in the show plus, if you are worried about how markets are shaky with regards to your retirement plan, fear not jeannie hnn josois joining us to layout the best way to invest in your portfolio [leaf blower] you should be mad at leaf blowers. [beep]

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rec welcome back to "fast money" it is a record millionaire boom. fidelity is seeing the highest number of 401(k) millionaires ever, and the nation's largest provider of 401(k)s said their investors have one major thing common they're staying the course during times of market volatility has it changed in recent weeks jeannie thompson is fidelity's 401(k) and a friend 401(k) expert and a friend of the show great to see you. >> great to see you too. >> you have to set your sights on a goal and stick with it, but at the same time you are finding that clients are overallocated to equities right now. so there is time and there is opportunity to sort of look at your portfolio and rebalance, right? >> yes, that's right you know, many times people set

it and forget it, but we do recommend they check at least once a year because in times when the markets have a run up we find there's equity drift and they are overallocated in equities, more so than they want to be. it is a great time to check, especially now with periods of market volatility, and rebalance so their portfolio is in line with their time horizon and tolerance for risk. >> karen, let me ask you something. on the over-allocation question, what about with bonds now? obviously bonds have gone way up what are you telling your clients about allocating between equities and bonds in this environment? >> yes so the important thing to remember within the 401(k)s, mostly mutual funds so there are bond funds but, you know, when someone is young, say under 35, we recommend about 90% equity, 10% bonds. the short-term moves in bonds, you know, we don't recommend people have a knee jerk reaction because it is really a long-term play when we look at the behaviors of

those that have achieved the 401(k) millionaire status, they do not make knee-jerk reactions to moves in the market they really took the long-term view, and that's how they achieved that status >> you know, with bond yields so low, jeannie, there's so much talk about whether or not treasuries are, you know, overvalued at this point, and in some of the allocations bonds are up to 40%. if you are an investor closer to retire about the valuation of bonds, what alternatives would you offer? >> yes, so, you know, i would say that they may really start to look at what type of bond fund they're in and evaluate that depending on how close they are to retirement, you know, if they were say, 60, you know, and they have five to seven years, still things can change within that time frame but i think the important thing to remember is that once you hit retirement, you still have another 25 years where you probably will have some money in the market so, again, you may not want to make that short-term move. it also depends on how much

guaranteed income you have, how much are you getting from social security, do you still have a pension plan, do you have any annuities. i think you have to look at the portfolio holistically before you make a reaction based on what is happening with bond yields. >> great advice, jeannie good to see you, jeannie thompson with fidelity. >> thank you what would you say to somebody worried right now >> about >> 401(k) and how you handle the volatility >> first of all, what we have seen is the well it effect has a massive impact on consumer spending it could go back to our last conversation and they seem to go together i think the key really is to make sure you are either with fund managers or you yourself are investing in companies and bond funds appropriate for your risk profile i still think a lot of people aren't taking enough risk in their younger years, and i think that's what jeannie was talking about. i think in the environment we have, the other thing is traditional metrics on what people will need for retirement are totally out the window based upon how much longer people are living i think people need to be planning differently.

>> and younger years could be 50s, right, if you live to 85. >> let's hope so >> coming up next, gap reporting earnings tomorrow. the options market signaling a grave warning for the retailer ahead of the results speaking of retail, look at the cramer cam jim is breaking down how to trade the names. that's coming up top of the hour on "mad money" much more "fast money" still ahead.

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♪ welcome back to "fast money" we have an earnings alert on nordstrom. that stock surging after hours on quarterly results, up more than 20% at the highs. courtney reagan has been listening to the conference call she is back at headquarters with more court. >> reporter: hi there, melissa i have to say it is a strong reaction for a report i would classify as mixed as best. nordstrom beat nicely on earnings, i will give you that, but missed earnings expectations and lowered the guidance for the year nordstrom said it is evaluating the list for tariffs, cfo dropping in only briefly during the call. >> the impacted tariff has not been incorporated into our outlook, but we believe it will be relatively immaterial for the

year >> some welcome news the department store says the quarter got off to a slow start after a disappointing first quarter and the anniversary sale was softer than expected on earnings call the co-president said the department store ran out of top items in the anniversary sale faster than planned and faster than in years past it was sort of left with some unsatisfied demand there now, nordstrom's q2 ned salt sa were down 5% the full price segment, that's the department store, that for the net sales down 6.5%, and the nordstrom rack division sales falling 1.9% digital sales on the whole up only 4%. that sounds small, smaller growth rate than retailers like target that saw their digital growth at 34%, but remember nordstrom's business is bigger than theirs, 30% of sales in the recent quarter. >> thank you i wish guy adami were here just yesterday he was talking

about snonordstrom. >> the squeeze. >> yes, because 27% of the shares are short and here we are with the squeeze. >> also, there's that, but i wonder if some of the things are so cheap all of the bad news might really actually be priced in i mean i don't follow this one closely. good for guy i think pete is long as well so maybe there's a lot of upside from here because it is still not expensive, even higher than the after market. >> you are long on the option? >> i'm long on the options, and mine has nothing to do with the earnings by the way. my long is all to do with the fact -- >> the longer is not like weekly -- >> i look at the nordstrom family trying to buy at $50 a share and it was trading at $25 a couple of hours ago. that's my reason those numbers to courtney's point, they're not impressive. anything about them was not impressive. >> are you going to get out now? >> absolutely not. i still think that the family wants in. >> i think it is all about positioning. nothing speaks clearer to that point of -- guy's point about the short interest and positioning going into the print when you see a stock pop like

this on very average returns it makes you think that maybe macy's is prime, maybe kohl's is prime, maybe a lot of the other ones are prime because the positioning is so lopsided right now. >> it has been absurd. if you think of some of the moves in the department stores, the cfo said consistent traffic trends, q3, ebdt margin flat nothing extraordinary in here. that's what investors need to remember on this kind of move. i would not be following this one in. >> if you thought the retail race was over, think again gap reports earnings after the bell tomorrow. they will be looking to kickstart a turn around on what has been a rough year so far, but the options market thinks the gap line is even low mike khouw in san francisco with the options action so clever, you guys. i'm reading the prompter at this point. mike, take it away. >> sure. we did see more than two times the 20-day average put volume in gap stores it is an implying a move of about 11.5% on earnings, compared to about 8.5% move

over -- at an average over the past eight quarters. where we saw the most activity was the weekly 15.5 puts, trading for about 40 cents buyers of the puts are betting that the implied move will be at least that magnitude to the down side, possibly larger. an important point t would you be buying these puts rather than simply shorting the stock? obviously the stock has been under considerable pressure. there's more leverage the sheet with 6 billion dollars in debt besides which, we have seen a lot of positive upside surprises from retail names including now nordstrom's. >> karen, what is your take on the gap? >> lukewarm on it. i mean it is cheap but it should be so i don't know, i'm not long. >> yeah, i think the headwinds are all known about gap, but then you have the old navy spin-out which is probably known as well. so i think it is, you know, offsetting it is still probably a negative setting for gap i wouldn't be there. >> i feel like there's always -- just like bed, bath and beyond, there's a 20% off coupon the gap, you know it is going to

be 40% off why should you pay full price if you know everything will be 40% off or more? >> he doesn't pay full price anywhere. >> well, i'm an off brand guy. but obviously the nordstrom -- i mean you look at the rack numbers, they weren't going there so i'm not going there enough but, yes, things like gap, it is always that bed, bath and beyond deal, the 20% off, there's always some sort of deal 11% move, that's a big move though. >> simply the guys are not doing enough direct-to-consumer. you need to go in the store and when you do you are looking for something almost free. i don't think gap has the brand anymore. >> mike, thanks nor the action iske khouw in san francisco. th friday, 5:30 eastern time for "options action" up next, "final trade. >> "options action" is sponsored i want i don't want any trade minimums. 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. ♪

ebt

welcome back to "fast money" it is time, time to reveal whether you at home are buying pete's pitch at medtronics. >> how did it go >> it was -- there are a lot of tony braxton fans out there. a lot, a lot ♪ don't break my heart >> there it is america is not buying the pitch on medtronics. 57% said no. 43% said yes it wasn't really that close

either >> it is what it is. mel, i still stand by it i like it. i like what the company is do in i like the fact they have margins, the pipeline, the revenue, their earnings growth they have a lot going on right now. i think they have the right ceo at the right time. >> do you like the dance version or do you like tony braxton classic better it is an important question. >> i'm a tony braxton era guy. when i was playing with the buccaneers, gitty-up. >> i don't even know what that means. >> we are still on the air. >> don't know who might be watching. >> different kind of show. time for the "final trade" what is your final trade >> snap, it is going higher. gitty up. >> tim. >> j & j to me is a diversified company, even if their pharma business is under pressure -- by the way the best growth in the pharma sector. i like j & j and it is not tied solely to pharma. >> karen finerman. >> i'm going with what i like.

alphabet the business is growing nicely yahoo! >> positioning is so ultra negative, kohl's store >> that does it for us see you back here tomorrow at 5:00 for more "fast money" "mad money" starts right now 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 hope you find it. "mad money" starts now hey, i'm cramer. welcome to kw"mad money." welcome to cramerica other people want to make friends, i'm trying to make you money. my job not just to entertain, educate and teach you. call me or tweet me @jimcramer there are two universes and that is the only way to