>> kayla, thanks so much for that great reporting. >> stock up on trips overseas. >> frankly after a selloff like that on that news time to buy a scotch or glass of french wine before they take affect. >> thanks for watching big sell dow town 494 points >> "fast money" begins right now. live from the nasdaq market site overlook new york city's stiemts square this is "fast money. i'm melissa lee. traders are tim seymour, karen finerman, dan nathan and steve grasso beginning with breaking news stocks slammed as a major selloff hits wall street the s&p 500 posting the biggest two-day drop since august. and the selling widespread all 11 sectors finishing in the red. so the question tonight is simple is it time to get worried, tim. >> the data seems to be getting worse. so we have important data coming up tomorrow and friday ism services and we want to believe this is the more important ism number as opposed to manufacturing number which got everybody spooked.

this is a trade war that seems stob a manufacturing trade war to what extent we get that tomorrow it should be noted that last month's ism services was a very bullish number which had the markets reverse a two-tai plunge like the one we had when people thought okay here we go but you had adp showing the labor market could be -- if you look at the three-month average on jobs on adp down about 85,000 over the 12-in month but not much changing. >> karen you said last night you were getting worried you're more worried on a relative basis more worried today. >> a little more today but i see a lot for fear in the market right? things are feeling a little panicky. not superpanic but one of the things i watch closely is the vicks we had a big spike in the vix today. i think now is not the time to buy volatility i think this move too far too fast if anything -- if we have the

story, the eu tariffs are -- that just came out, if that's sort of carb shall that with tesla numbers i guess we'll get to later if that starts the momentum down and there is a big down open i will sell protection into that i like to look to buy things when they start to trade in int jers i'm looking for some of those to add. >> technically weak. cut through the 50, cut through the 100 day. i said it the other night on the show i don't see us doing what we did last year. it's too easy. i don't think the worst is over. but i think you're okay to dip a little bit on the buy side >> you would buy this two-day dip. >> the other day i bought alta sold it -- so stock specific today, thought about buying roku was on the fence on that things that have been beaten up drastically that are due for a bounce i think you're okay with. >> dan. >> i think about this time last year, the s&p up almost 10%.

around 2950 no one thought we could go down 20% in a matter of months i don't think anything is too easy when we talk about selloffs in the market where the situation is rates are low and people think it's the only place -- u.s. equity is the only place to be relative to europe and agia i just don't like hearing this strayed stuff moving around. i don't like it floating we've been talking about trade as it relates to china and that's the most important. that's the economy growing 6 plus% when they when they slow it reverb rates all over the world. we know the data in germany is horrible that's practically are in recession that's the biggest economy there. when the trade war goes on multiple fronts, i say, you may get your headline you are waiting for in china >> wait a minute. >> global pmis were negative they were the first ones that were negative. they were negative for over a year and now for the last two months you're seeing that turn. so it might be us chasing them

down at this point i don't know. >> well, i -- i agree with that so what -- that's terrible news isn't it, being the last man standing when we certainly from the resilience we have in the economy. look, we talk about credit and people come on say if credit is okay. you're not seeing credit hold up if you see the job market fall off. because consumer credit will rickle through but also corporate credit side. we talked about the corporate balance sheets if you look at the high-yield etf, it's down 2 points the last couple days not great news if you look at the two-days moves in a number of sectors including banks, the banks in two days have taken out almost the entire rally of the fourth quarter zbreelds yields have gone down and yield curve steepened because the low end is more bearish. >> i think it's interesting to think about 2016 a volatile year. brexit caused volatility in june and july of 2016 then into our election i think what we are seeing just

this week is we are seeing politics infusing themselves into our markets a little bit. and on the air today i heard is that leg down because bernie is in the hospital and warren might be the candidate this is stuff we will hear the next year or so and it may have impact. >> or until eriarnings start. >> when there is a void of something fundamental, the markets trade off whatever you give them. >> do we think earnings are decent the third quarter given what we've had so far, micron, carnival, fedex, color ox taking down guidance. delta saying costs are high are. i don't know. >> i thought delta is a bit overdone but on a day like today doesn't matter things get overdone and the pendulum swings far. i'm interested to see what the banks tell us, not so much what happened during this past quarter but what they are seeing not just for their own business which is really important obviously. but they have a great insight into what is happening in the u.s. economy

that will be really interesting. the autos kind of rolling over don't love that either but i do -- i totally agree with steve. we need -- that's the main thing to me. the main piece of data when i buy the stock is what are the fundamentals of the company? not warren or who is ahead or -- >> but also look, we started off the show saying where are we is this the same way, time to by or sell? last year we had -- everyone was raising rates or we were on a raise -- a higher rate path. now everyone son pennsylvania lower rate path. >> because things are really bad. doesn't that matter? >> here is the thing at a certain point it matters. >> it doesn't matter now. >> i don't like the technical setup. i think we have been weak around the 3,000 level when we broke down from there. my issue is that the fed does not have ammo to fight the next recession. unless he use us the balance sheet. once you use the balance sheet that's a whole another pandora's box.

>> we're talking about technical and where we are in the market cycle. i also want to talk about positions which we talk about all the time i think it's the most important thing. while we talked about equity investors could be considered underinvested in a dwchlt process you look at the data i get from brokers toemgts gross capital at balance sheet, the size of capital at work. how much exposure is in the market we're in the 95th percent i'll they may be more net neutral and maybe not net long in the ways they have been in the past but they have a bigger balance sheet which is dangerous at times of higher risk which whatever you want to say about where we are, we have so many more factors out there that could be things to be worried about. and the fact the hedge fund community is near what would be seen extreme levels in terms of overall balance sheet. i don't like that in the fourth quarter. >> in other words be, if there is a sell sayings situation head or the exits then we see all that money coming out.

>> i see we guys as things change into year end and some guys might not make it into year end you were seeing the weak he were hands and stock to catch a bit on short covering. but you're supposed to simplify during a difficult period, not get more complicated i think there are guys becoming more complicated >> yeah, again, i don't think it helps market participantsthat the president, you knowious just yelling at everybody all day on our network -- every network i think back to 0u9 2009 when we were in the throes of the worst sell off we had in a long long time and we had a president who was calm, just said that sort of thing. those are the sorts of things that will be helpful going forward. i think this is something that you guys better get used to because this is going to happen here on out. on a daily basis as we get into the end of this year and dsh zbloosh but with when had a president yelling at everyone and market went to all-time highs >> the market hasn't done

anything in 18 months. >> it went to all time highs under every other president. >> i don't think that's the litmus test. you dig in once earnings. >> hold on. >> sno but the point is but yelling at the fed and trying to kind of get them to do something that may not be particularly natural. >> you said you better be aware of something wave been wore of this we've had a president. you've been complaining about the president last four years went to all-time highs that's the point that's not the litmus test >> he may preside over one of the worst selloffs we have seen in decade too because the policy haves catching up to him that's a really important point. >> last word last word we're moving on. >> back to what you're both talking about is where politics inject and where they haven't mattered think about what we're actually starting to contemplate if you get any change from this administration none of it is good onof it is good for the market is what i'm saying in terms of what you have in terms of legislation taxation hasn't. >> hasn't been good for 18 months and not good for the economy. >> i'm not making the call on

that what i'm saying from here on out if you change the prokt of the status quo, the market is not liking it. >> okay. one of wall street's biggest bulls believes the market is overreacting to recession fierce chris harvey head much wells fargo securities you say that on a day like today might be time to put money to work on the pullback. >> what we are looking for we saw the ism manufacturing. we'll get servicing tomorrow for in line i expect the equity market to start to sell off a bit more we get pennsylvania 1, 2% sell off then it's interesting. 28.57, 28, 25. then the risk reward changes we like stocks when they're lower not higher furthermore, the sfup into tariff or trade negotiation is pennsylvania lot more productive we think something non-negative is coming out of that. and you can see a bounce so we're looking for that negative news to come out. we're looking for that washout to occur if it is we look to take advantage. >> does your view on the trade negotiations coming up later

this month and almost a week from now, change at all given what has gone on with the president? and again, we're trying not to be a political show. but this obviously impacts how the president goes into the negotiations >> right, so we have always said that trade negotiations is a second half type of thing. and so as we get closer to the election you need more and more certainty. the one thing we keep hearing is there is so much uncertainty we don't know going forward you need more certainty. i think the president is very could go nizant of the fact. he he is also could go nizant is the economy is a difficult spot and you could put your sfres and push it over they need more progress -- if you look at it he has impeachment to deal with the economy slowing down he has more stress with overseas issues he needs a win in the short-term whafrpg he needs so momentum going into 2020. and that kind of forces him to get a deal on the table. furthermore with, if you think about this, if he doesn't get a deal on the table, the economy

slows down somebody else's name goes upon a trade resolution and i think that would be infuturing to him because he has done heavy lifting to get the deal on the table. >> you base country turned bullish a little bit earlier this year was it april or so >> april or so, that's right. >> and so since sthen is part of that bullishness predicated on this notion of a stock market present? because it seems like everybody frg you talked about just now when it comes to a trade deal has to do with trump wanting to be the one to claim yit, trump not wanting the kplee to slow down further, not wanting the stock market going down more. >> the commentary before the political, tim, i agree with you. politics are now starting to come into play we haven't provides to do np i don't think we're ready to price it in. i don't think warren or bidden are enough of a threat but going forward, the per slepgs start to wax and wane opinion and we're seeing that if we get a change in leadership and trade negotiations don't go

as planned, ism service is worse then rethink things with but all the bond proxies moved all the low vol moved. this is not fourth quarter of '18 hitting underperform this is different. people moved into a cash is king good mental healthty the train pain trade is for the reinflation trade to occur. >> even with that said with the waxing and waning and political pressures you stand by financials which upgraded in september. >> upgraded in september what we wanted to do when rates are low a lot of pain in there, bad news, valuation is attractive the underlying fd are okay we had a conference numbers came down a little bit. and we think overall the fundamentals are in decent shape, not fantastic but decent and for the valuation we think it's a pretty good risk we reward. >> chris, great to see you chris harvey of wells fargo. you like what chris had to say. >> i like the financials i'm long this has been a terrible week

the last two days, i guess but i think that what has started as the rotation out of growth at any price toward value continues. and this is an area of i think very good value. >> yeah, 4.8% down in two days in banks someone was right a couple days ago and doesn't owe the doesn't feel so right now. i don't know the right trade on banks. but i tend to agree on the balance sheets and the shall swral rotation we saw which should include banks some late cycle cyclety. i think that's a fair trade. but across some of the other sectors it's clear the defensive sectors have been not yesterday's trade they've been the last nine months trade pan therefore i do think the market is populationed defensively. >> what do you think happens if you think about this turning lower like we did in 2018 and the q 47 when koermgss went to one. almost every risk asset went down you have xlu and staples two of the best performing sectors in the s&p 500 trying trading at

all-time highs outperforming the broad market what do you think they do? if you leave expensive growth right now, what are you doing with expensive no growth stocks like to me i actually -- i heard all day long -- tony divider on last night talk bag how different it is. it doesn't really matter if the stock market goes down and snowballs these may lead the way and the other things come coming out they're not going back right away. i don't think it makes sense to be complacent 5% from the all-time highs >> what has me worried if we don't get a deal some type of deal in the next week and earnings are flat and start to really see the fundamentals shrinking there, i don't like the way the technical setup has been extremely negative and the fed does not have enough to fight off recession this time around so we'll know in the next couple of woks where the market is going. that's the weakness i'm worried about. >> all right coming up tesla shares under pressure. the company announcing new delivery numbers we'll bring you the latest

later, more on the big selloff and what means for the fed's next move. live from new york city's times square much more "fast money" after this 300 miles an hour, that's where i feel normal. having an annuity tells me my retirement is protected. learn more at retire your risk dot org. ♪ you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts

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well wak to "fast money" we have a news alert on tesla the tok down almost 4% in the after hours session. let's get to phil lebeau with the details on the delivery numbers. phil. >> melissa, the numbers fall short of what wall street expected totals deliveries 97,000 vehicles, 7960 oh the model three. the remainder a little oef 17,000 the model s and x if you take that 97,000 -- by the way, the estimate on the street was for 99,000 deliveries but if you take that 97,000 add it with first half deliveries, year to date this they have delivered just over 255,000 vehicles, which means they need to deliver about 105,000 vehicles in order to hit guidance that has been delivered and they stuck with all year of full year deliveries of between 360 and 400,000 vehicles again, tesla falling short of wahl estimates for q 3 tlaefrs the estimate was for 99,000 deliveries they came in at 97,000 melissa, back to you.

>> all right, phil thaengs phil joining with us the the latest on tesla's delivery numbers after close of third quarter. 105,000 remaining. >> to get the bottom end of a raenl. >> right. >> that they announced. >> i will still short the name it's interesting how we choose to focus on deliveries and other times we don't care. the fact that elon musk said in february he annualized at 500,000 before getting kicked off twitter. tells you the numbers are all over the place and they are not making the numbers that's not why i would be short the company. i'd be short because they can't make a profitable car. they are not profitable. i want to see the off billion sheet liabilities and see how long they can operate and if capital markets go bad that would abbig problem for the company. >> the move in the stock is really not huge. not trying to polls for tesla. >> no it's not. >> yesterday finished higher today outperforming relative to the down day in the markets. down 4% -- in the context of things is like flat.

>> right that's flat for tesla. i think that actually given how out of favor money losing businesses are right now. >> right. >> they're growing and sexy and whatever and have a charismatic leader it trades well. but we were talking. >> nhtsa asked for information regarding the summon feature because there are the virals videos over twitter about people using the summon feature calling a parked car to come to you. and there were near accidents, all sorts of things that tesla i'm sure didn't want to happen. >> i think it's a testament. tim said before a lot of the underprormd performers performed lately people reaching for beta tesla has a 27% short interest down 28% this is fitting the bill for people betting against it for a long time. the tax credit that's rolling off for good come january 1st. whatever they did in tlaefrs i think a lot of that, healthiy

poerpgs was pulled forward i won be of an ver there it has a world of competition but also has a short interest that any hint or any sniff of positive news, the stock can rally. >> yeah, i think tim hit the nail on the head this is a company if this is one of the worst situations from the balance sheet standpoint and also the product that they sell if we went into recession. and also you see what crude oil is doing it's one thing if you tell me the crude target is 807 in 2021 or something but it's stuck in the mud here you have a situation where this company was desperate to raise cash a few months aigt they may need to again if any literally demand falls off a cliff for the model three doing 807% of the units or something to me i don't get it the other thing is for elon musk to come out with the email a week ago saying we are likely or good shot of getting 100,000 in the quarter and coming up short. it seems like going back to corporate governance, enough,

already. >> seems look leak why would you leak something wasn't accurate. >> it was a real leak. >> i think he likes to round up, yeah >> just about. you know plus or minus 2 k much more "fast money" ahead here is what's coming up next. >> announcer: time to take cover? what you should be doing with your money following today's big selloff. and later hitting the skids. why investors are slamming the brakes on the auto stocks. stick with us. ne iba rhtftckig aer this if you're on medicare, remember, the annual enrollment period is here. the time to choose your medicare coverage... begins october 15th and ends december 7th. so call unitedhealthcare and take advantage of a wide range of plans with a variety of benefits... including an aarp medicare advantage plan from unitedhealthcare. it can combine medicare parts a and b, which is your hospital and doctor coverage... with part d prescription drug coverage, and more, all in one simple plan...

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energy all leading lower let's get more on what drove the selloff. bob pisani at the new york stock exchange, bob. >> let's call it a combination of additional tariff worries and speculation on the health of the u.s. consumer, the engine of global growth right now. part of the problem with parsing the state of the consumer is very confusing data. for example, the movement of two big ticket consumer items, housing and autos with, don't seem to be correlated right now. housing has been very strong on lower rates. lennar had terrific numbers. hitting a new high but autos not great. ford had disappointing sales and down today now home building stocks up 16% in three months. auto manufacturers this is what i'm talk bag down 12% in the other direction. here is four things traders look for in the next couple weeks first and second any slowdown in the consumer starting with the friday jobs report where expectations are for a dane of 145,000 jobs and second markets

watch for any decline, significant decline in consumer leaders this year. and it's been clear the leaders, costco, home depot, starbucks, nike all of whom are up 20 peppers. by a significant decline i mean 15% to 20% from the highs. notable. only starbucks showing signs of weakness third what i say is a technical breakdown. right now any significant break below the 200 had-day moving average for the s&p average. and finally near-term fourth quarter guidance from significant global leaders i would start with jp morgan that would be october 15th so far no signs of any earnings recession this year. back to you, melissa. >> thank you, bob. bob pisani at the new york stock exchange steve i know you were watching the home builders and auto stocks. >> i'm still in lennar up 47% the real winner has been kb homes. up 75% year to date.

pulte up this is a winning trade direct correlation to interest rates. if interest rates tick up some way around the fed you have to watch with the segment that's already been so beneficial to a lot of investors >> nerms of consumer, i think there are probably just as many data points on the earnings side right now. i know it's very, very early that could indicate a strong consumer as there are for weak consumer. >> yeah, i mean, look, we have heard strong consumer from a number of companies, especially people like nike and discretionary. discretionary is not dead. but look let's check the payroll tomorrow if wage gains fall below 3.2, 3.3% you wonder how sustainable it is at some point companies can't continue to hire look at industrial sectors the auto companies tell what you could happen to jobs seeing it? steel. the steel industry of a ajd. >> the dow closed nearly 150 points away from wiping all

second and third quarter gains today. and the next guest is sharing wall street's recession concerns mike gappen is barclay's head of u.s. economic reev welcome to the hoe. >> thank you. >> what is your -- what is your probability now of recession. >> 25 to 30% over the next four quarters >> high. >> higher than normal. in a regular expansion phase you'd think 5% to 10% per year like unconditional probability but what's concerning is the slowdown in the labor market to your point, if employment growth slowing and we have got soft manufacturing and hours worked slow. it's less aggregate income growth, less ability to support consumption. they're not lock step just because one slows doesn't mean the other one follows. the savings rate is a% after all. but you wonder how long it keeps up we do expect private consumption growth to slow and the economy to remain at trend if not a little bit below the first half

of year we think was a machining trade slowdown the second half will be consumer focussed >> what are some of the other leading indicators you look at that maybe give us a hint what's coming. >> honestly for us it's all about employment the three leading indicators would be employment, employment and employment that's about as funny as i get as an economist. mainly. >> it's good. >> it's about the best i do. mainly just because it has the -- the labor market has the highest signal to noise content. it sends you the most robust signal historically households won't be as kmfbl spending if employment and prospect look bleaker if some consumer companies are not getting earnings and doing hiring, and that persists then consumption is going to slow down just like business spending did. it doesn't automatically mean a recession. but you have less absorption capacity for what might come next. >> your probability of recession, compares to about 10% on any other sort of normal

quarter, correct. >> right i want not a tail risk but not a baseline yet. >> if you're telling us that it's employment, employment, employment going to your number one joke in your repertoire. >> the only and number one. >> it's even funnier the more i think about it that's the primary determine nant of whether or not we're in a recession. what is making that probability go from 10 all the way up to 35% on the outer bounds of the estimate, if employment has been relatively good? what about the number is forcing that probability higher? >> i think just a repeat of the same number. so the slowdown. the reported data showed about 210,000 jobs a month last year, call it 16550, 165 first half of this year. if we'rerepeating 100, then over time that builds up slower less employment growth, less aggregate hours worked. you're kicking off. >> it's historic low unemployment basically full employment.

i'll take that why do you think the expansion has been in long injury it's more of a product that we've been without a recession for this long in the expansion? why do you think it's been this long and do you think we could roll off quicker because it has been so long before we've got there? >> i think it went this long in part because of how far it fell. and then the slowness and cautiousness in the recovery our argument for years has been slow isn't fragile slow is actually durable we were plod plodding in a way that was quite resilient going forward -- just because it's been this long doesn't necessarily mean the next one has to be deep, severe the difficulty in calling recession risk right now is there don't to be obvious overhangs, obvious exub rans, boom, bust, a fed looking to tighten a lot. we have difficulty finding an outright catalyst. but it doesn't appear there is of an overextended sector ready to course correct and when it

does you get a very deep recession. it doesn't automatically mean -- since we have grown this long, that the recession has to be deep there can be a lot of factors driving that. >> do you think, though, that extremely low interest rates for this long has caused some of those boom/busts to even out i mean the excesses to get flattened so you don't have those excesses as we have seen in other cycles. >> i think in part we have taken down -- certain sectors were in recessions at certain points in time. >> right. >> and i also think the regulatory environment probably coraled some of the excesses we maybe traded lower growth and lower volatile growth for potentially faster growth for a period but risk ofover shoot i think those are part of the reasons. and maybe policy has been less effective. there is a zero lower bound story. monetary policy has less traction in this world so taking longer to climb out and didn't

give us the major overshoot. >> mike thanks for come by. >> thank you. >> fascinating stuff by mike if we think about areas where if the consumer does start to first of all earn less money and start to lose their jobs, i think the trades that have been most sensitive to the environment have been home depot, some of the places like starbucks. think about the labor costs fed into the businesses. even though there may be less jobs, you may see the margin significantly lower. >> you got to mention starbucks here july 26 the stock traded all-time high up 8% after earnings after printing a 7% comp in north america. amazing the stock has been down 15% since then so you know, the point is things overshoot to the upside. also the potential to do so down side that stock has no bid. and fundamentals seem great based on the u.s. consumer. >> coming up kwhek out bed bath and beyond that stock falling in the after hours. despite the earnings beat we give you the highlights. plus we found a bright spot in

the sea of red we'll tell wlau it is. ne iseacafr tbk tea quick break. the biggest challenge of...

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petitioned bath and beyond shares of the retailer fall in the after hours. more on the quarter head every to eric chemmy at headquarters >> it's been a volatile after hours session for the embattled retailer following a mixed earnings report. reporting a smaller than anticipated loss bup revenues came in below expect aches in part due to high severeens related to recent layoffs. weak are than expected stocks also the company saying it's making progress toward hiring a new chief executive and expects an announcement soon. remember steven temares resigned in may and scheduled by mary winston. who stressed on the earnings call the firm made good progress in reorganization efforts stabilizing sales. the company is evaluating for offers for core dwipgss as it works to improve the in store shopping experience by offering higher margin products to

shelves. over the past few months the company made additional changes from amid pressure from activist investors. cutting corporate staff by 7%. and eliminating the c.o.o. role. bed bath and beyond also plans to cut inventory by 35% by the end of the year. coping the after hours move in perspective, the stock has fallen nearly 15% since the beginning of the year. it's down over 50% from its the most recent highs early in april. back to you. >> eliminating inventory that sounds like a great opportunity to use the 20% off coupon deeper deals. eric, thank you. higher than expected severeens costs seemed to stand out to me. seemed strange to not have a handle on that going into a quarter. >> aflt maybe they decided we'll cut further and so. >> so the lay office are bigger. >> the lay office higher the this one, i don't know, i'm concerned for them looking at the balance sheet it's not terrible. they have time they do have some sometime

but i'm concerned about this long this bad. >> are you shocked is that from april, i think it was announced there were three activists in the -- i don't know -- interest abouts and the stock is zoun 50% from april are you shocked that you're not getting any blip in the stock that has right now over 50% short str? there is a litany of things that they're supposed to be doing, selling encore. >> it sounds like. >> overhauling the board. >> they have that. >> yeah, i don't know, you know the warren buffett when a good -- bad company in a good management team team up it's the company's reputation that remains intact maybe that might be what's happening. i don't know. >> it's a company with almost $12 billion in sales but their sales are done almost 7% in a quarter year over year for the quarter. it's -- there is a structural secular thing we talk about all the time for these guys. kaern talks about it and they have a billion dollars of carbon the balance sheet.

but it's hard to know how dwik the burn is and where this changes pretty quickly it's hard to be excited about thp when we saw the number announced right after the market close i was surprised it was holding in the fact that it started to get down because the revenue miss is not what people want to see. i think they dealt with the $1.12 loss but they wanted revenue numbers. >> another big consumer name costco reporting earnings after the well, sit something at the intersection of retail and consumer state your namesless options trade are hoping for life dan brakes down the action. >> obviously the stock in massive outperformance up 40% on the year the options market implies 5% move either direction. basically the average over the last four quarters how much the stock moved post earnings. today not anything that exciting a lot of short dated calls trading. callsy two times that of puts. you know, it's interesting because here is a company that you know is obviously the stock is outperformed. the company doing well expected to post 14% year over

year earnings growth this year but set to deaccelerate next year trading 3 times that there the is one year chart holding the uptrend nicely but interesting enough it's coming back to the uptrend and back to the level where it broke out in august. remember we spent maybe two days in a row talk bag that opening in china and the stock literally went berserk and kept on going it's come back to that trend a bit. just to give you a sense how much this stock has just outperformed, look at that the five-year basis. look when it broke out at the 250 level about a year ago up 20%. or earlier this year about a straight line. to me this is one we see the big box guys there is concentration in the wal-mart, costco and target. in one, you know, you better not miss because if it breaks that downside where it trades 33 times, the deaccelerating eps number next year there is considerable down zblood in would fit into the category of talking about the consumerfer

the consumer weakens who is in trouble? if you look at big box stores they've been the biggest beneficiary of a stronger consumer and job market that bchted that part of the labor force. higher wages for people deserving them but also more jobs if you look at the multiples that all the stocks, costco is a more manageable valuation than some others. but relative to themtz, the valuation in this big box group is -- target is fine but they've had such a big run based upon the strength of that consumer. >> paul all of the by big box stocks run i would santa fe this is as defensive as a wlormt and target as people look for savings. >> right. >> right. >> when the economy. >> how. >> and people want to spend less even though this -- sorry to interrupt. >> that's okay. >> the go-to place it's the most expensive -- look at wal-mart is even at 2, 23 times. and target probably i don't know, 16 times >> yeah, i mean it just seems like though whenever you get in at a discount, regardless of the

valuation it's rinse and repeat. they seem to grind it. and they seem to have membership really continue to come back out. >> you like it on a pullback. >> i like it on the pullback appear the international angle of growth. doing a little under $40 billion in revenue that's where you get the growth out of costco. >> you outlined the action you don't like it yourself. >> it is what it is. i'm telling thu you talk about membership that's a big part of the story. when you see earnings deaccelerate the way analysts expect year over year in fiscal 2020 when sales growth is set to be the same high single digits it's telling me the membership is less. and that's what makes it trade lower, if amazon prime, hundred day shipping is eating into what these guys have done so well so long. >> for more "options action" tune in to the full show friday 5:30 p.m. eastern time up next, home sweet home lennar nailing it on earnings hitting a fresh 52-week high discuss that plus transports tanking

alongside the markets. much morp "fast money" right afteth r is see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

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well back to "fast money." we found a rare greenup arrow in the sea of red lennar topping the tape on earnings beat process hitting the highest in over a year they saw the volume of new orders increase. is it time to pile into lennar and homemade builders. >> i like the home builders. steve has been on this a long time everything sets up nicely. which is people are employed wages have been going up and interest rates are really low. and the u.s. seems to be doing fine that sets up nicely. for me i'm in home depot hasn't worked this week. but generally a good place to be but i like the trade does allthe of the home builds still expense i have even with the run up. >> lennar is a chart you said to watch yesterday. >> packed a lot in there. >> yesterday >>. >> before the earnings -- listen, i think that's fantastic. i don't think this is a sentiment that's, echoed across other sectors. i think you really -- steve said

it early in the show it's been correlated to rates. seems to be a very specific story because you can say wouldn't low rates be good for the auto guys? we are stuck at 17 million for five years we don't see that growing. people are us eyeing the opportunity with low rates to buy homes. it doesn't seem to be carrying over to others. >> agreed if you look just for the folks on the charts, somewhere around $55 people waiting for the stock to break out of the range it has done that on today's number one day does not give you the coast is clear but the valuation certainly makes sense. also relative to itself. but this could be another one of the stocks if the consumer starts to weaken we all know what we're the poster children for what went on in 2008 into '09 these are better run businesses and better balance sheets. >> and the housing sector was so depressed for so many years that it did bounce back you had household formation bounce back. then a headwind lumber costs,

subsided i have an idea where i wanted to get in $70 where i wanted to get out trading at 57 and change i'm hanging on a while longer. >> coming up airlines hitting the headwinds. and jim talking about the market slide and how to play it coming up top of the hour on "mad money. we are live at the nasdaq in times square much more "fast money" still ahead. devices are like doorways

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welcome back to "fast money. the transports falling hard in today's sell i don't have. the iytef tracking the group dropping 2%. check out airlines hitting major turbulence american, united, delta and alaska air. >> you had to do that. >> did you have to. >> yes, among the worst performers in the group. a sign of morehead nds ahead and we. >> oh, please. >> we talked about delta before because dealt iaaf lowered the q 3 lowered the full year didn't have the 737 max exposure the others had yet here they are in the position they have to take down guidance. >> this guide was fine as far as i'm concerned.

it was nothing terrible about in maybe there was some slightly higher costs. >> yeah. >> or chasm getting into 2020. people are always concerned about overcapacity for airlines. as we get upon a day and a two-day move based upon cyclicality and the broader economy and airlines would certainly be place you'd see sensitivity. delta's two-day 9% move peak to trough, probably closed in about 7% down two days i think that's an opportunity. i don't have to buy it tomorrow. but it's trade between 50 appear 60 like clerk of courtwork the last whatever. as you get near the bottom of the range i think it's worth owning at the valuation. >> the bigger signal from the transports as a whole, would be quite negative. >> if one is a dow theorist they would be quite dower for the markets. >> one of the worst charts. >> man, i knew it was coming. >> i mean. >> the dow transports has gone 15% from the september 2015 --

shall the worst. >> what's worst retaylor transporting >> trpts. >> i think -- this 9500 support level is massive if we lose that there goes the dow. we're getting old timy with the theory. >> it's worth noting ups outperformed comparison to fedex. fedex down 12% ups up 18% year to date. but back to may ups was in -- was holding the uptrend and just broke the uptrend in the last couple days. that's something to wind chill wait until it gets back above the level. it seems ups does all the right efficiencies and proceduresen a everything they need to do to come back. fedex and possibly a slowing consumer. >> can we bring up the chart. >> the worst chart. >> it's instructive for the audience the iyt. >> the worst chart in the world. >> but if we show that can i get a 2-year chart on this because it's important to see. >> longer than that please.

>> the iyt traded around 175 multiple times found good support. it's pun done nothing. it's absolutely. >> five and year. >> worst chart you have seen. >>icle. >> that's as bad as it gets give me some of that. >> you're missing the -- you mischaracterize it's woun of the worst charts in the market not the worst i've seen. >> sorry man. >> there is the 5 high pressure year. >> coming up against an interesting support level. >> okay. >> underperformed. >> i think it's important when we make hyper bol he can statements we chalk it up. >> there it is. >> dan's point look it's been a very extreme move in the last three days for huyer. uxtfil adtres ll him we're flexible. don't worry. my dutch is ok. just ok? tell him we need this merger. it's happening..! just ok is not ok.

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on an options trade it's a paste. it's not liquid or a gel. and even explore what-if scenarios. where's gate 87? don't get mad. get e*trade and start trading today. time for final trades. tim. >> a two-day chart on google doesn't look all that good down almost 5% but the valuation to me and despite the regulatory headwinds i like it. >> karen. >> delta we might see it down tomorrow on the eu news. but injury that presents an opportunity. i think it was overdone on earnings it's going to be fine i think. >> dan. >> you know the color ox you mentioned earlier, i see similar sorts of behavior in other names in the group i think you sell the xlp

>> grasso. >> alta beauty, a director buy a boat load of stock about $60 billion worth of stock the stock popped i was long i sold out do what you want with yours. >> that does it for us for minneapolis meantime, "mad money" with jim cramer starts right now. my in addition 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. i am trying to save you money. my job is not just to entertain but to educate, teach, and put a day like today into context. call me or tweet me. listen to me i don't want you to panic. don't buy the prevailing

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