finish the session eyes slight gains in light of poor earnings. >> the it firmed up. basically the market is zpising the misses and assume it might have been the trough quarter for earnings growth. >> we are out of time on "closing bell" thanks for watching. >> "fast money" begins right now. life from the nasdaq market site over looking new york city's times square. this is f2 "fast money." traders are pete narjen stim seymour and guy adam a mark tepper president of strategic welt partners. earningspalooza. e ebay pay paul onthe move after results. ment of the conference calls under way beginning with the highlights and the big mover, tesla just reporting results. the big mover. the stock ripping higher zpoit a miss we have full team coverage gene munster is live in minneapolis. but phil le poe has been digging in the numbers and continues to. we go straight to him in

chicago. phil. >> melissa, the reason the stock is shooting higher is because the adjusted eps is $1.86 profit for the third quarter. and that is far above what most people were expecting. the expect aches, the consensus out on the street was for a loss of 42 cents a share. revenue came in a little under expectations at 6.30 billion the expect aches for $6.33 billion in revenue and looking at the gross margins, 18.7% is what most of the analyst were zeroing in on in terms of what the expectation was for the third quarter. remember, many people believed as they were increasing model 3 deliveries, especially at the higher price point, that we might see higher gross margin process. well the gap auto gross margin coming in at 22.3% a couple much production notes, first of all, trial production has begun at shanghai plant

preponderate remember ramping up production and deliveries in china into the end of the year the model y according to tesla ahead of schedule in the production beginning in the summer next year and limited volume in the tesla semi come next year as well. the conference call, melissa that's the one everybody is focused on when we hear from tesla ceo elon musk coming up after you guys are off the hair you can bet that's the focus. >> phil, gross margin as you mentioned it 22.8. sequentially better. gap gross margin sequentially better and cash and cash ka equivalent better year on year as well as sequentially. what stood out to me phil is there is a lot of emphasize on the shanghai factory and looked like they changed the format of the investor letter. it's very different. it's shocking to me. >> which is why the people in the newsroom were saying hold on a second what are we looking at. >> now you can compare numbers very easily sequentially as well

as year on year. but they have a lot of color photos of the shanghai factory where a lot of analyst had questions, right. >> i think that's going to be a primary focus for all the questions on the conference call melissa, remember this china is not only the world's largest auto market it's the world's largest ev market. i've been there. and i know others have been there as well. tesla is a brand that stands out with chinese buyers. they know that if they can get a successful launch with the factory there. it's notts messy, clean, they have a chance to really do very well at least initially in china and beijing and the tier one cities and filter out from there. >> phil, thanks. phil lebeau in chicago with the latest on tesla you. >> what did you make of guy. >> 185 in may, the stock i incorrectly now in retrospects thought the move to 255 squeezed

out shorts in the earnings period 26% short interesting with the majority squeezed as it moved higher i thought the trade was to fade the move that was incorrect you pointed out owl the good things in the quarter. revenue disappointing. i have no idea where the eps came from. that's taking digging. interesting to see what they say on the call. the conference call is a wildcard i don't necessarily believe the story. but i didn't believe it at 255 either. >> good for tesla. this sounds like a great quarter for them i'd love to see what they have under the hood on the eps number but some the of the epps things that concern me about tesla which makes it a no touch for us is you do have all these dope he were pocketed competitors coming out over the course of the next several months you've got volkswagen set to compete with theodel 3 porsche set to compete with the model s pmt look at netflix as new competitors entered that market i am concerned about the stock in the long run. >> so, look, i'm short the

stock. short it around these levels even a little bit higher but i tell what you, the things most important are are really about the cash flow and really about the earnings side. but what is interesting is look the cynic in me said all i heard about was china and this was attention differential where i think they can begin production in china it's an exciting market with you we don't have to know what's going on in mcin terms of true demand we can assume it's a great place and diverting attention to there is great the profitability is the most important because the balance sheet is all i care about. and when they tell you we think we'll be above 360,000 in terms of deliveries that means the fourth quarter is a record quarter. nothing they have been close to doing based upon the numbers we in so far year to date which is extraordinary i'm cynical on that the thing about the profitability, you have to remember, is they are cutting cap ex, op ex-doing everything

they can and did a mini structuring in most of the 2019. when you cut that you should be more cash flow positive. can you really grow in an environment if this is a growth story? but right now the numbers that i'm looking at, they've answered a lot of questions and i have not changed my view. >> skeptics abound on this desk pete. >> i understand which there are concept iks and it makes sense because we've been promised a lot of things. we've had delivery numbers out in the sky that didn't occur can they actually get to the numbers? guy the one thing i push become a little bit was disappointing in terms of revenue pretty close to in line the it missed but close. i thought that was interesting i think also the possibility of what might exist, tim on terms of the china production that's sort of stood out when phil was talk bag that's begun and could go forward and could they actually take market share over there where plenty of ev competition i think there is a lot of interesting things about this right now.

the cash and cash live equivalent you brought that up mel process. we always look at that and it seems that number is not bad. there is not a lot of great things but i'd say there is a lot of nod not so bad and pretty good but can they continue to deliver. delivering the 360 plus vehicles but right now squl highly confident. >> you got to be impressed too with -- if you expect about 18% and they're delivering 22 plus% in terms of the margin and maybe that's a projection towards 25%, that's going to be pret dwr interesting. i know these are all numbers we look at and say, sort of scratch your head how real that he feel sometimes with you the numbers we look at are the numbers we have to deal with and that's why we see the huge spike in the stock. >> up 14% more reaction to the results. luke ventures founder gene munster why do you think the stock is up so much? >> melissa this is a great quarter for them i reluctantly use the word great

because i think it's such an emotional stock one way or the other and i don't want to pick sides and i want to stay straight and nay narrow down the road specifically in hindsight they kind of told us this would happen in the june letter. they've been recognizing some revenue from the deferred component. that's probably the biggest missing piece between the revenue fractional miss and strong earnings. they have $880 million in deferred revenue last your they've 370 million recognized over the last year pu the increment thele piece we learned from the letter they put out was they still have nearly $500 million to recognize going forward. and so what that probably means is a portion of in upside in earnings maybe considered a third or half of it was related to deferred -- essentially 100% margin revenue that came from the full self-driving feature they've been selling the reason why that is an

important factor in this is this -- when you think about the quarter relative to the tesla story, is that the deliveries have been moving in the right direction. i'm surprised at the guidance calling for more than 100 probably in 510,000 vehicles in the deasy. but the earnings fees, the ability to shave off this deferred income, makes is more easy for the company to essentially improve that earnings piece, which obviously has been one of the negatives around the story and they can sustain that. that 570 million they could take piece fs of that over the next two years. this whole idea we are a quarter away from things collapsing, i think that story took a step back overall story took a step forward today. >> nerms of the other items, what phil and i were talking about or all of the shanghai pictures, the shanghai gigafactory looks like it's ahead of the schedule according to the news letter look at the pictures, gene

how big of the bull story is that how big of the 14% rise in the after hours is shanghai? >> i think it's a small part of it i think the big are part is the earnings piece and you can see some of the leverage how they pull off the deferred and the impact on eps i think that's the biggest piece. shanghai is important. in context, it's 15% of tesla sales from china that's at products essentially 20 to 40% more expensive because of tariffs some of those, not all will be eliminated so opens up this big market for- dsh from a logistics standpoint and cars being made more affordable my guess is the guidance, the delivery guidance for december assumes that -- haven't had a chance to go through the whole release. but assumes that they are going to be delivering some cars into that big market. that's an important factor i would put that number two behind the earnings and the importance of the call tonight >> gene, it's tim.

let's talk about the profitability. i think you're getting at with the deferred revenue ability to have flexibility in the numbers. because the kuchgs for me is second quarter was record numbers and record cash burn and a major loss and you had dynamic where we really didn't see any improvement. and in fact the revenue mix for the three versus the x and the s has been leading to less profitability. those other cars with cash cows and the revenue mix has them at 20% of the overall revenue how is margin getting better here i'm very confused. >> so in the june quarter the margins were negatively impacted especially on the s and x which had impact on the overall marmons because essentially they have the new model, the raven model is coming out. they are discounting some of the old models that had negative impact on selling price and margin too i think that probably has played -- that dynamic are dynamic about what happened in june has played an impact in some of the movement back. i also think that the reasons

why margin move higher is there is some form of efficiencies that they are gaining. a year ago there was a lot of focused on ability to actually manufacture. while it's far from perfect everybody i think they made improvements that impacted margin and the last piece talking about deferred income piece. a unique aspect to the tesla story. no other car company has the model where they can upset a $5,000 features that's pure margin and that impacts margin. >> thanks, gene, before we let gou, professor munster. >> we have a class. >> on the quarter. >> grade on the quarter. >> i give it a minus with elon involved, he is so polarizing i need to apologize for getting a grade that starts with this. buts in a good yup

they show they can continue to grow the indemand question is not as significant. and on the profitability side i think there was a measurable step forward here. as someone short the stock i would be -- ienl not short -- but if i was short, i would be concerned at their ability to keep turning the screws down and in the quarters to come. >> gene, thanks. gene munster a minus on the request are after hour sessions highs up towards 18%. some of the other headlines i don't think we verbalized but come out in the shareholder letter the model y is ahead of scheduled production expected by summer of 2020 positive nap gap netting income goog foortd positive free cash flow going forward as well quickly guy on the move. >> again, i start by the way i finished the last time i spoke, that the huge short interest i thought majority of the shorts covered into the quarter i was wrong. i think that's what you see now. i'm not suggest -- a lot of it could be machine driven as well and pete can speak to that it's a staggering moving on the back of a good quarter

but again i think you have to wait and hear what they have to say at 6:00 when we go off air anything can happen on the conference call. looks great now things can change quickly. >> up towards levels we have not seen since march we actually broke the 300 level. this is something we'll watch throughout the after hours session. meantime another big name ever a the bell microsoft be, the stock volatile after earnings josh lipton in san francisco. >> bottom and top one other number the azure revenue growth 59%. a deacceleration sequentially in year over year of course plenty of folks on the street looking for the deacceleration in part they say the law of large numbers kicking in another thing to point out cloud revenue azure dynamics 365 other cloud properties 11.6 billion in the quarter. gross margin 66% i did catch up with kirk ma tern at ever core isi to get his take on the quarter kirk argues microsoft keeps

delivering against high expectations a metric he points out commercial booking up 35% kirk said an incredible number given microsoft size and scale the growth in the cloud he says now translating into real earnings power he says that drives the stock higher over the longest. while the stock isn't doing much in the after hours kirk saying listen it's well liked a and well owned stock and this quarter good in his opinion. waiteding for guidance the call at 5:30 eernt. >> we'll check back in when the call gets under way. >> turning to you pete on microsoft. >> the they are crushing into the number absolutely. that's something he touched on there. let's look at deeper, gaming and other categories where they are winning and continuing to show us growth, mel there is a lot of reasons to like the quarter you can understand why it's probably not popping, though and i think the guidance is going to be the real key what are they able to tell us next what's next? that's what everybody cares about. they already kept the stock

where it is because of this big run up because of everything they delivered but now it's about what's next. and can they actually give us even more if if they can this is a stock that easily could be $150 stock in a short period of time. >> let's play choose your own adventure. >> what game. >> is that new bear with me if they give guidance that's right in line with consensus what does the stock do >> is that me or tim. >> goes down my adventure is down taking the roller coaster down here is the issue with microsoft. and pete articulated this well i mean the expectations are high but meanwhile you basically between ibm and red hat mergen and workday you had a lot of negativity around cloud and cloud margin and cloud growth for people that counted on cloud. no one counted more than microsoft. and the question is in a world where cloud spend is three times of i.t. in the next five years how commodity advertised and crowded is it? i think microsoft struggled with

that timothy don't strug. le on execution. each of the xenoen are 11 billion-dollar revenue businesses >> you like software, right. >> we like microsoft and own microsoft. you know one of the issues is this stock is up 35% year to date almost double the performance of the s&p 500 there is obviously execution risk and they did well beat on the top line beat on the bottom line. the only issue is azure has slowed so it was 64% last quarter down to 59% this quarter. the street expecting 62% but there is nothing to be worried about here long-term right now, they're the number two player in cloud. i think they're going to overtake amazon over the next few years. there is a lot of legacy internal i.t. within businesses. and there is definitely a need for their hybrid solution. >> look, again, this last year this this quarter 76% growths in azure. 59 now still 59% is significant three business units, to tim's point all basically $11 billion.

>> it's crazy. >> quickly operating margin talk about that quick. 38.5%. the street looking for 35.3% that's significant of a business of that size when you see operating margin growth to me in that magnitude i think it offsets the slowdown in aand your so the fact that the stock is not lowered to me says you know, i think it's actually a very good quarter going higher from here. >> is that your adventure by the way. >> she didn't ask me to choose. >> i only asked you. >> you or. >> love the fact that i was the only one entitleding to on the adventure. >> there is time to ask others conference call in 12 minutes. meantime guidance give opinion president mark zuckerberg grilled on capitol hill. we break down the highlights of the heated testimony tell what you it means for facebook and big tech later here from jonathan government lub why he sees another market rally on the horizon. live from timesqres ua in new york city. much more "fast money" right after this ♪

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save up to $400 a year on your wireless bill. plus get $250 back when you buy an eligible phone. call, click, or visit a store today. welcome back to "fast money. facebook ceo mark zuckerberg wrapping up testimony on capitol hill

let's get to ylan mui live in washington with the highlights hey, ylan. >> reporter: melissa, the hearing six hours long, covering a lot of ground. but the focus on libra zuckerberg tried to frame it as a way to ensure that america remains the leader in global financial innovation and not china. >> i think our surely risks if -- if a chinese financial system becomes the standard in more countries because then it would be very difficult if not impossible to impose our sanctions or the kinds of protections that -- that i think we are right to want to have oversight around the world. >> now, zuckerberg did promise lawmakers that he would not move forward with libra if he doesn't get approval from u.s. regulators he also said he would be willing to leave the libra association but despite the six hours of testimony it doesn't look like he has changed any mindsious jet. committee chairwoman maxine

waters says she spoke privately with zuckerberg after the hearing for a few minutes but came away oppose ds to the cryptocurrency and not sure what it would take to convince her to back it. democrats slammed facebook off and on a host of other social ills including election security and hate speech. >> facebook has been systemically found at the scene of the crime do you think that's just a coincidence? sir? >> even republicans -- melissa, even republicans who were not onboard with the broader tech backlash still were skeptical of moving forward with libra. back to you. >> ylan, thank you ylan mui in washington, d.c. would it be the worse thing for facebook to not do this cryptocurrency >> would it be the worse thing. >> yeah. >> it's a good idea to abandon

it's a loss leader any anyway. that's down the rode taking the eye oh off the ball of the core business i said it before appear say it again. with every fabric in my being i want to dislike facebook for myriad reasons but technically it's done everything it has to do. nobody leaves advertisers don't leave. sets up in my opinion extraordinarily well into earnings on the 30th i think it's re-testing the highs we saw july of 2018. doesn't give me joy to say that but that's what i think is happening. >> what's with the deep seated hatred of facebook. >> there are a number of reasons. >> it's facebook itself. >> it's unsafery the experience on the site, the way they deal with the media sit on capitol hill. >> he is on capitol hill. >> no -- >> just the way he presents. that's just me. >> five hours of testimony is not a good time at all. >> and notable was bitcoin 8% pullback on the back of what had been rest you are ecstaticed in part of the rally on the way up.

i think the regulation around facebook as it relates to anti-trust or break them up or could ultimately be a positive for the company i do in terms of shareholders and looking at the pieces and billion-dollar businesses for the billion user footprints that i think in the case of instagram for sure are places where people see more value. i think in the short run a company trading at this multiple with in size and this space and this ability to grow margins is -- tells you exactly what guy is talking about nobody trusts the management team nobody feels they are -- you know, you invest in good management teams companies trade at premium multiple based on the quality of management and i don't think we have that here don't know how to measure the business. >> they may not have a lot of folks 'trust but people don't leave. to your point they don't leave they're there whether on facebook orr instagram or any other parties. >> sharing cat videos. >> and i fine the whole thing crazy and i'm basically in the same corner as you guy in terms of dislike but they have all the

verticalless, mel. they need to have that if they want to grow in e-commerce you understand why they want the labor ray part but there are better ways to do this they could flush it and pull out another way to create themselves into a better site. they wanted to be proactive. he is young. i think everybody there it seems like is very young they're going in this direction. the quote unquote bitcoin or whatever you want to call that world. but i think that's the big thing right now. they could flush it tomorrow and start all over with something else >> you could read more about the testimony on our website cnbc.com we have much more "fast money" straight ahead >> announcer: microsoft on the move after reporting results the company's conference call is about to kick-off. we'll bring you the highlights and later, the call of the day. we'll tell what you drove apple shares to new all-time highs stick with us. "fast money" is back right after this when you look at the world, what do you see? we see patterns.

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take a check on tesla, the shares still higher by a whopping 17% this after a better than expected eps, a slight miss on revenue but margin came in better and they said they'd be free cash flow positive going forward. we'll keep our eye on this until for the rest of the session until 6:00 when the conference is underway. thks next guest stays says two themes emerging the earnings season retires bring in jonathan gol up eupper back what are the two things. >> first, there is a couple things going on. if first it seems like a horrible earnings season in terms of growth rate but there's a drag from big cap tech which has been really something we haven't seen the

whole recovery cycle energy is a drag but looking at the average or typical or median stock in the benchmark. it's delivering a 5 or 6% earnings number. it's feeling better to a portfolio manager than the index is going to appreciate and what's important on the earnings that -- we see some on the results we see from tech companies, that the expect assigning is that this is the worst for both energy and for tech and that we when we go into next year we see the uptrend but fourth quarter is like this it's a weak overall number. >> in terms of the next rally to come you predict one in 2020 >> you know, yeah, i think we talked about this when we were here last time there is a strange -- we had a 3025 target when we tutt people thought we were crazy and everyone was expecting me to raise it i said think we'll be dead money until we see the ism bottom out probably sometime in early 2020. and i'm sticking with that

but we're getting closer to that point where there might be some green chutes it's a question of when we see that but the question i get from institution is when do you dip back into value? when do we see the data move what kind of leadership are we seeing i don't think we're there yet. we have to get at least through year end but i think we're closer towards that potential turn. >> you think ism bottoms at the beginning of the next year. >> i'm not sure exactly where. i think we get a bounce sub -- sub48 is low but, yeah, i think you'll see the industrial data continue to weaken i think the ism is going to be here a little weaker but we're getting close to the end of the downward cycle. >> do we soo see that continue to hit services. >> services meaning -- are you talking about business services. >>s like instead of manufacturing you have services. >> yeah, i mean, listen, i think that right now if you look at the real theme in the mechanic

it's that low vol defensive stocks have been the -- the dominant theme it's not growth beating volume it's low volume and defensive stuff beating everything and the question is how much longer i think this has another three or four months to go and we're really keep an eye on when is the time you think about the other side of that but for right now we're sticking with the low vol trade and it has more legs. >> it seems the massive rotation from august into september is what's happening again if you look at the exact same movement in the groups, whether banks, bit of energy, industrials and, sure, you could say it was just another bounce off of -- because any re-tested the lows but to me this seems to be gaining momentum in fact in allocation i would think is part of what extends in market rally. >> first, you know, kind of taking your side and then telling the other side. >> why i'm wrong. >> why you're wrong. right. if you look at semi and hardware beating software they're telling

you there may be something here. but the economic data has not come in any better if you look at the economic data and we see it coming up capital goods orders, durable goods orders things like that they're showing indications that they're going to be weaker and until we see that turn around i think this is going to be a head fake what do we need to see interest rates above 2 in order for this to be real and we are not there and i don't think we're going to be there between now and year end. >> jonathan, thank you good to see you jongt golub. >> all right. >> interesting rates above 2 does the market get worried. >> the market rates goes up interest rate -- the most interesting thing food -- caterpillar reports. the caterpillar report eps missing by 8% revenue missing 5% full-year guyedens you could drive a true through it prior. somewhere between 12.06 and 13.06 and lowered it it to 10.59 to the 11.05 i want crazy how that he ratcheted down numbers

by the way,s in a stock raled idea from 113 to in august to 135 where we are now and the stock up today the market is discounting a a lot of things and now in terms of a name like cat looking straight at valuation. i think that's sort of what jonathan is saying and in terms of interest rates doesn't matter it seems where the interest rate vitamin environment is the markets seems to want to go higher >> why did cat go high her. >> you dw can make argument on cater peril for valuation. and certainly argument for a lot of the other things move i don't think we see a major rebound in the pmis and leading indicators i griep with the east thesesis but you've had a rotation a some of it technical in terms of where the bond market yet everybody is saying have with he bottomed on yields because if we have equity markets for the short-term love that i know the lower rate was a reason to give us a chance to kick up the multiples where the mailbox could trade and that's what we needed to see so far so good. >> the other the surprise was

boeing sticking by the forecast for the 737 max to return to service by the end of the year which they acknowledge is dependent entirely on the f.a. chl a deciding to clear the 737 max for service. and the stock moved higher. >> yeah, i think a lot of that has to do with them increasing estimates for the 737 max production by 35% for next year. whether or not that happens remains to be seen it does have to get back in the air first. but i think there is some room for optimism there this thing has been way oversold if it was going to drop below 300 we were backing up the truck and buy some it's moving opposite direction right now so i think. >> i was waiting for the same thing and never got there, if tesla was low database like 285 got i got to get in but i never got the opportunity. >> if you think that was it you should buy the stock anyway. >> you're right. i look at it all the time and the production, the idea that they're going to increase the production that's something i think everybody hung on to today. looking at the numbers themself and losses they've been a cash

flow freak show, right well, they actually lost cash the past quarter there is reasons to look at the quarter and say it was terrible but when they talk about ramping up, the that's interesting and are they going to return to where they are this is a stock that's had everything thrown at it yet here it is you shall processing towards 400 again. i mean unbelievable. >> what i don't understand -- call me a skeptic is why are investors bleaching their forecasts for camped up production for the 737 max next year when so many ifs stand in the way between them and their forecast, namely the f.a.a. >> the f.a.a. >> and the regulators around the world not just the united states. >> and god only know what is other headline risk. we saw that last friday when they unearthed the instant messages. >> hex gate what one analystist calls it. >> you have to believe they go with the fine tooth comb anything else. i understand what everybody says the valuation argument has been fantastic at 340 on the turn to tim's point maybe you get in

now. i still think the headline is so significant you have to wait and see. >> all right coming up. apple hitting another all-time high as one top ranked analyst says the record rally getting started. we'll toll you who has newest highest price target on the stroo et later the most wonderful time of the year for retail. why the race to christmas is about to kick-off in a big way. >> holy cow. tu we explain when "fast money" rerns. >> tomorrow. >> yeah. ♪ with kids jingle belling and everyone telling you be of good cheer ♪ ♪

welcome back to "fast money. apple hitting a fresh all-time high today on the back of a morgan stanley price target hike analyst katie hubert raising to 289, now the high on the street. is the apple record rally unstop stom stoppable your favorite analyst on apple on the street. >> she has been generally better right than anybody else. i know she is not the highest rank but i always followed her and she has been right in my opinion more than anybody else now all of a sudden she raises to be the highest on the street. pretty aggressive missouri on her passport but what i love what she is looking at right now. talking about the does the tv mean for apple and how is that going forward? and how many people have they

been able to get either subscribers or free through other buying i think she makes sense we all know the ecosystem and how apple works. they get newt the trap hold new there everybody is a member if you have a phone i have a phone your fireman needs the phone. that's the growth area we finally got underneath it i thought it was good. now turned out to be a good thing. when the phone went under 50% of the revenue i think that was a great thing actually because then it's about services at 21%. it's about wearables at 10% of revenue now the 48% on the phone. that can stay somewhere in there or maybe even shrink but i think the services and wearables is the area that's the growth, margin and growth than that's what she is talking about. >> what we heard from texan sort of underscores the dichotomy between the chip makers goo going into the apple supply and other industrial areas >> the texan -- we can can talk about texan. to pete's point apple pay took

over from starbucks in terms of apple pay payment system that's going forward as well we'll mention it comes down to a math problem you say are they earning $12.75 or there abouts next year? i think she is doing the math saying this blended multiple comes in at around 22 or 23 times the earnings that gets you straight to 289. >> yeah, it seems like a lot of people are underestimating the potential of the apple tv plus and what katie has basically arrived at is she is assume that one out of ten apple iphone users by 2025 adopts apple tv plus and she is getting to that number by looking at the adoption of the apple music service, right if that happens all of a sudden now you look at services growing at 20% year over year rather than low teens again all recurring revenue whereas the omd business model was one time business mod zblool it shows the leverage in the multiple we are not debating

services talking about if they can monetize the 1.5 billion installed base this is a function of people now. -- the other thing tough remember as an investor in apple. you have the extreme emotions sentiment one way or another now the veet is very much on barred appear seeing these massive upgrades and obviously you have to start thinking about where have we gone sentiment overload? i don't think we're there. i'm long and very excited about in dynamic on services but you have to remember when the stock gets overbought and oversoldenin' and sentiment and we're getting there. >> why do you think that, pete, because i feel there is a contest on the street who has the highest price target last year it was raymond james out with the highest now morgan stanley with katie hubert. >> we have gene munster on earlier. he actually has a bull case for apple at 350 now that's no not his target but i'm telling you if the bull case he has three cases he lays out i think the other interesting thing, mel be, in the low rate environment one of the things

katie pointed out as well, the dividend with the buyback is a yeemd of about 8%. that's only going to get better i think because they continue to -- the buybacks continue, the huge cash flows and dividends that they continue to raise that up as well in this environment, as 8% number, that's impressive i think. >> all right coming up, amazon gearing up to report earnings after the bell tomorrow and the pgs ohs market imply interesting moves on the results. break down the action. but first trick or treat retailers moping sitania upstages halloween this year don't go anywhere. much more "fast money" right after this

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♪ well back to "fast money." don't look now we're just 62 days 62 days from christmas and children and grownups alike gear up for the most wonderful time of the year. but wait. >> thank you. >> target and wal-mart are already in the christmas spirit. announcing plans to release special deals earlier store hours and quicker free shipping options in some cases as soon as in week. so is at the tail's big bet on christmas days before halloween going to scare off shoppers? we were having the extended conversation about how tim likes to shop. >> i'm a last minute guy let's

be clear this early -- this early access is not something i look for. but we are defining a new time horizon black friday no longer is black friday. the internet has change the way we shop and the way we actually look at the calendar so smoothing out the earnings season for a lot of retailers, i think is ultimately very healthy in terms of understanding and predicting the business. the other good news for target and wal-mart is top down and bottom up story. the consumer is doing very well here what we heard in from folks from subscription and rerating the multiples they have not traded at is because the consumer is in good shape that's not changing between now and even if you believe we're at peak labor this is a strong earnings season. >> i'm sitting at home yesterday before catching the flight to new york my son at the kitchen table with the target christmas magazine circling the wish list already 8 years old. he know what is to do to do. came in the mail yesterday he is circling

it's a good season wal-mart ceo reemt said two indicators that really dictate the success of the holiday shopping season. the first unemployment rate. we're at 3.5%. doesn't get much lower the other one gasoline prices. essentially flat year over year. i think we're in store tor another record year. >> interesting season for the retail resist obviously earnings a bit later. we might get the first couple of weeks of the holiday shopping season. >> and the numbers. >> on the conference call. >> good are god help us. >> you hate in. >> it's madness. >> just because the hoho happens before gobble gobble. >> long before gobble gobble i'm putting on the halloween -- next weak whatever that monday -- >> ♪ you're a mean one, mr. grinch ♪ ♪ >> i'm the opposite of frifrmg i'm the dog, max. >> max.

>> with the rein deer head you want to shop for christmas go to costco i'm not advocating a gross of toil paper for the loved one zblas you heat micer >> from the countdown of christmas to the countdown of azmodan. what you can expect when they report earnings tomorrow after the bell service now also out with results. jim cramer sits down with the out going ceo and incoming nike ceo john donahoe live from the nasdaq in times square much more fast right after this. ♪

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welcome back to "fast money. the big tech earnings slate continues tomorrow when amazon reports after the bell it's been a iks inned bag for big tech the last few months and amazon the worst performer after a big hit in august and failing to recover underperforming the s&p by % since august and the options market isn't expecting the report to put a dent in it mike, what are you looking at with the "options action." >> the options market implies a move about 4%. less than the 4.7% it average

the last eight quarters they reported they are reporting a third quarter, historically the most volatile over the last ten years or so looking at average move of 9% over the period one of the trades we saw is targeting a small move and small range too actually we saw somebody buy three hundred october 25th weekly 17.95, 180 oh, 1805 kaults butterflies pb targeting the middle strike, 1,800 and has between the other two to be profitable. the thing is they spent only 16 cents for that and can be worth as much as $5. that pay off about 30 to one you look back over the course of the last ten years this this only would have worked out twice. but you still would be profitable because you got the 30 to 1 pay off the two times it worked out a low probability bet maybe 5% or so but if it happens to hit 1,800 the person could a wig pay off. >> pete, what duke of amazon

tomorrow >> i know that they control the industry we talked about microsoft early yerl, talked about the earnings and wanting to hear the guidance but that's the competitor. aws against microsoft. we know they own the world in e-commerce i continue to think this stock has more room to the downside nan upside. >> mike khouw in san francisco, thank you we'll see you on friday for the full show 5:30 mi u eastern time. congp next, we have the final trades ♪ >> announcer: "options action" sponsored by think or swim by td sponsored by think or swim by td ameritrade ♪. ♪

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[sfx: mnemonic] welcome back another check on tesla wow, 20% in the after hours session. after hours exception highs better than expected quarter positive free cash flow guidance quarterly going forward. they're going to hit the year end delivery numbers we'll watch this into tomorrow's session. and tim, you've fwt a big day tomorrow. >> it's exciting tomorrow -- what is october? it's rock tober and the annual hedge fund competition for a charity i've been involved in regular to stand on that's me playing the drums. it's a wonderful wonderful moment sold out times square hard rock

cafe raising money for a charity that effectively does prosthetic limbs and corrective surgeries for kids in emerging markets changing lives at a time when you can do it. you can still show up tickets left go to altso.org and support it's a great charity. >> your band is jam partners >> jam partners. >> playing for an hour. >> playing for an hour do a 70s set it's kind of cool. i know it sounds boring but those maybe get guy out for it. >> i hope you wear that shirt. >> the shiny shirt i think i parked that shirt in the -- in the pile that's made the scrap pile thank you. >> time for final trade pete. >> you know he is talk about chips with texas instruments opinion where they're the category it's not great. that's why they suffered micron technology this is going higher giddyup. >> tim. >> high in apple you have to be aware of the sentiment the multiple is defendable at these levels.

>> mark. >> blackstone, another great quarter, money coming out of traditional stocks and bonds and into private alternatives back blackstone best of breed. >> don henley karen carpenter, tim seymour drummer and lead vocalist nasdaq. >> nasdaq. >> see you tomorrow on fast. "mad money" starts now there is always a bull market somewhere. find it "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to make you some money. my job isn't just to entertain but to teach you call me at 1-800-743-cnbc. or tweet me @jim cramer. if you're not confused you're not paying attention