their stake in wells fargo is down to 3.3% started the year closer to 10. the most recent filing in august showed it at about 6%. the good news is it could explain some of the weakness in the share price. we're out of time. thanks for watching. have a great long weekend. "fast money" starts now. i'm melissa lee and this is "fast money. tonight banking on gains financial stocks leading the market today after months of struggling to rebound off their lows where the sector goes from here. plus it was downward facing dog for shares of lululemon today. later, it's been a wild week for the triple ts.

the dow falling as much as 600 points before turning around and briefly going positive only to end the day down .5% the nasdaq led the losses. what a session, guy, following yesterday's big selloff. what do you make of the action, guy? >> interesting mel and i text before the show she asked if this was an old tie or a new tie i pulled it out for this friday's show. what do i make of this i mentioned i'm looking for an open lower spend the rest of the day rallying into a long weekend. we sort of got that. the late day selloff concerned me a little bit. there's a rotation in the financials and the fact that the vix which spiked above 38 closed lower on the day i think you have something to think about for both sides of the equation, both bulls and

bears as we head into this long hollywood weekend. >> what i thought was interesting about the session and maybe this is a head scratcher, is that bonds are selling off throughout the session and remain lower we got the yields going up to .72% on the ten-year. there really wasn't any wavering even when the markets turned around >> you definitely still have the steepening of the yield curve. the difference was when we were up 5 or 6% higher on the s&p and the nasdaq, the yield difference between the s&p 500 and the ten-year bond was much smaller there was room for the market to rally. the vix was actually down even though nasdaq and s&p was down 3% today that was a bit of a tell, hey, wait a second, maybe this market is going to rally here and reverse. i would say if you think about the jobs numbers today, which is

really kind of the big news out there, there was a little something for everyone maybe things are decelerating a bit. but i think people realize the worse the economy gets, the more the money printer gets revved up. >> given today is friday and volatility usually goes down ahead of a weekend, was that a real signal to you that things are going to change during the session? >> to an extent, yes i think heightened volatility here to stay for the foreseeable future, definitely into the election season. we've been a bit toppish one thing to keep in mind is that volatility can work to the upside and to the downside typically when we talk to and refer to about skew, we think about put. what we've been seeing is indiscriminate buying to the upside that's helped push volatility up as well. put call parity tells you that

calls and puts are the same strikes, you have the same implied volatility. >> we have a full show on this 5:30 tonight is that here to say? >> i'm not so sure, quite frankly. i brought that chart along because we are at this interesting technical juncture where we've traded into this narrow wedge the question is what direction do we break. i think back to the end of april where you had a steepening of the yield curve from the end of april through the beginning of june and you saw banks outperform to the tune of about 20% over that period you've seen the curve steepen again. back to august 4th it's been choppy you've started to see banks outperform to the tune of maybe 3 or 4%. i'm skeptical that banks are going to be able to sustainably

move higher. i think any trade that's predicated on the curve steepening that's driven by increase in inflation expectation should probably be faded at this point. they talked about what they want to do, but they haven't necessarily talked about how they're going to do it they have the same tools in their tool kit they've had over the past ten years they're undershot their inflation target consistently. my guess is inflation expectations are probably going to come back down. the curve is not going to be able to continue to steepen and banks are probably going to languish once more. >> this is a chart of the bank etf versus the xlf which didn't perform quite as strongly. do you think that wedge does resolve to the downside? >> listen, if i had to guess at

this point, i do think we head lower. the banks have traded awful through this whole thing a lot of what you have to worry about with the banks are those two aspects. it's that inflation expectation, then it's the default risk if you get an economy that is flat lining and there's still 8-9% unemployment, then you have to worry about what the banks' balance sheet is you need to be worried about the fact that there's some default risk in there. that's why i think banks probably resolve to the downside. >> guy >> i got to tell you something that brian kelly, i love this group, by the way. you got b-ice breaker. you got the general. you got brian kelly. he's a genius. he's a genius, mel i don't know what debenture is i can't spell debenture. banks aren't really the problem

this time around i don't think banks are going to scream higher. but a name like citi for example is trading at 70% of tangible book it's just too cheap. i do think city is challenged. i do think the banks are challenged what i think is going to happen, the banks are going to rally on a squishy tape and you're going to see everything give up the ghost as we get into october >> and bonawyn, banks have been on your shopping list during this sort of selloff period. >> yeah, they have if you really look at kbe or kre versus the xlf, the xlf has outperformed quite significantly. there's exposure there to investment management, invest service companies. i think you pay a premium for that i'm focused on the large money center banks if you look at the last earnings report, they had the provisions for default risk

they also had exceedingly high fee generation and trading profitability. i'm willing to pay up for that aspect of the business. >> bonawyn makes a lot of good arguments, jeff mills. why are you so down on the banks? >> i think if you look at the provisions as they stand today, the question is are they enough based on what ends up having in reality. thinking about unemployment, you still have 4,000 people on the sidelines in the labor market. you have another 5,000 categorized as temporary unemployed you do have this shadow unemployment going on. even though the employment report was okay, i still think you see that permanent unemployment number continue to go up. in terms of the balance sheets and what ends up happening with the losses, i think that's still something we need to keep in mind if i'm looking within banks or financials, i think it's tempting to look at a wells fargo down 50% for the year and start to bottom fish a little

bit. i would still want to be with a jp morgan. some of these companies that are in financials that aren't banks, yes, they're trading at a premium right now. i think they will continue to do so for some time. >> wells fargo is on the move after hours after news of berkshire hathaway cut its stake in the company to 3.3% from 6% previously let's bring in jeff hart was that a good move on the part of berkshire, the notion of cutting one stake in wells fargo here in half practically >> look, banks have performed better recently. that's been quite of nice to see. you've got to view frit from th lens they've been pretty lousy performers it's going to take a while for it to play out i kind of find myself looking at

the universal banks, the citis, the jp morgans, the bank of americas, even the goldman sachs. i think when you le're looking t banks, you're looking for scale and revenues that are not as dependent on your traditional spread lending the environment is tough it's gotten a little better but it's probably going to be a long time before it gets a lot better there's not a lot of loan growth out there. so the more you can get fees and kind of non-interest spread related revenues, i think that's the place you want to be looking at banks. >> we've been debating banks on the panel. it seems to come down to how you view the economy in the future, whether or not you view unemployment getting worse, whether or not people are going to be foreclosed on, et cetera do the banks have enough in

terms of reserves right now, and under what scenario do you think those reserves are enough? >> i do think reserves are built enough once we get into next year, it's going to be a matter of releasing the reserves we've kind of seen them take their reserves up to a level that would suggest losses get close to half as bed as they were on the super severely stressed scenario. that seems reasonable to me, because the amount of stimulus we have out there is really helping a lot. a lot of the regulatory forbearance is helping a lot the jobs numbers were really bad, but they're getting ready fast people can go back to jobs if the economy keeps improving, which i think it will, that's generally good news for the bank because they're kind of the lubricant that keeps the economy going on the financing side.

but when i look at banks in general, it's still hard to overlook a tough rate and tough loan growth environment. i still find myself looking at a jp morgan. what i like about a jp morgan is if we go into a double dipper session and things really get bad, the strong get stronger jp morgan is strong. they're going to come out of that a winner. if things get better, they've got leverage to capital markets and things like that they're well positioned to do well in almost any environment we come into. >> jeff, the argument i've made for a while, banks to me it's about price of tangible book i've made the argument that i think jp morgan deserves that premium valuation. right now as the market closes we're looking at a citi which tangible book was reported around $72 the stock is trading at $52. i think it should trade at a

discount, but should it trade at that steep a discount to a name like jpm >> no, i don't think it should citi may not be hitti inting it they're a hot clolot closer talking about jp morgan, you buy it today you kind of win either way citi is the way to play it if you think the economy is going to be better they've got a much bigger credit card portfolio you tend to see bigger losses and you tend to see them sooner. if the losses don't materialize, citi is set up to be a winner there. but you've got to have that macro view and be willing to be patient. >> jeff, great to see you thank you. jeff mentioned credit card exposure that's interesting

just a couple weeks back or sew capital one financial ceo made comments they don't really have a good grasp or whether or not their borrowers are employed or unemployed there are a lot of borrowers out there at varying degrees of unemployment a lot of these cards are tightening their lending standards. brian kelly, i bet this caught your eye. >> yes that's exactly the issue that you have with banks, with credit card companies, is that you don't have a good idea of, number one, what your lender looks like at this point, the one that you're lending to and number two, what the economy is going to do are we going to remain at an elevated level of unemployment if that's the case, something like a capital one which tends to be a little bit lower on the credit scale is going to have a whole lot of problems. until i see some kind of sign that we haven't plateaued here, i think we've got to stay away from these. coming up, investors souring

on shares of lululemon today has the stock gotten too far ahead of itself? lulu wasn't the only name that didn't participate in today's rebound. as we head to break, take a look at some of the stocks e y.ndof the biggest rebous thda our retirement plan with va gives us confidence. yeah, they help us with achievable steps along the way... ...so we can spend a bit now, knowing we're prepared for the future. surprise! we renovated the guest room, so you can live with us. oooh, well... i'm good at my condo. oh. i love her condo. nana throws the best parties. well planned, well invested, well protected. voya. be confident to and through retirement.

analyst downgrading lululemon but raising the price target on the stock. would you be namaste-ing in this

game. >> clever. you know what, this stock has done so well i agree with their call in that what they were saying is, listen, it could go a little bit higher but we can't imagine it's going to go a heck of a lot higher we're downgrading it to neutral, which is a little weird, but up kbr grading the price. the point i think they're making is we have a lot of upside how much more is left. how much more do you want to squeeze out. when you look at what's happened in the market, if we're getting a rotation, maybe we're getting a rotation then this stock could suffer from that. >> it was a very introspective note

they write we just can't that's refreshing how many analysts of late have come out raising ratings just because stocks are running away from them >> it's actually nice to see somebody throw their hands up in the air a little bit lulu along with a lot of other stocks has been part of this trade where people are buying because they think they can sell it at a higher price doesn't mean it's a bad company. i like lulu, but i then when you get forward earnings at 65 times, you at least have to take a pause.

for comparison, peloton is going to earn 1$1.8 billion in 2020 ad their market cap is 25 billion in no universe does the acquisition of mirror equate to a $12 billion increase in market cap. in that environment, it underscores what's going on fundamentally. it doesn't mean you can't invest and own the company for the long term but at these levels you have to be careful >> this is the most highly valued specialty retailer even more so than the heyday of victoria's secret. >> we're talking about $50 billion market cap the valuation metrics are

something to take into account here it's about risk reward i don't know how much upside there really is. keep in mind this is a consumer facing brand we're talking about all of the threats to the consumer but yet we're saying at their price point they're going to be able to continue to have the type of sales and margins they've had historically i've got on yoga pants now but i don't know how much longer that whole phenomenon is going to last. >> etsy is being added to the s&p 500. manager guy, what do you make of these additions? >> etsy is a fascinating company. we purchased a guy adami sock puppet on the etsy many years ago.

the stock traded up to 135 it's pulled back people will rank on this company in terms of valuation, but the growth has been there. how long it lasts, i don't know. out of the ones you just mentioned, etsy is the one that sticks out i never would have said this because i didn't understand it i sort of understand it now. >> h & r block comes out of the s&p 500.

breaking news on amazon web services >> a tough new worded statement from amazon web services this responding to the pentagon which earlier today suggested that it favored microsoft for this massive $10 billion contract on cloud computing. amazon web services responding to that statement from the pentagon, accusing the president of blatant cronyism here the statement goes on to say that the president is simply making the wrong decision, amazon suggesting this is nothing more than attempts to validate a flawed, biassed and

politically corrupted decision some very strong words from amazon there's an ongoing court battle about all this it's clear this is not going to be resolved today, but this fight goes on, the rhetoric here heated between these two companies. >> seems like it might not even be resolved by the election. obviously there is some bad blood between president trump and jeff bezos >> amazon suggested the reason the president wants microsoft to get this contract and not amazon is because jeff bezos owns the "washington post" which the president has said is biassed against the president. they're saying this is political corruption of the highest order. this statement by amazon, i've rarely seen anything like this this is a very lengthy statement from one of the nation's biggest and most powerful companies lambasting the president of the united states as being part of a corrupt effort here to simply

benefit himself personally it lists example after example that amazon feels is simply inappropriate by this administration really tough language here >> eamon jafrs

let's go around the horn brian kelly? >> in this environment i want to look through what could be a trough and i want to buy a long-term play >> put it in your drawer kind of thing. >> exactly >> top drawer, let it go. >> general mills >> perhaps not surprisingly i'm going to be a seller of kbe. i think from a valuation perspective there's a catchup trade to be had. >> bonawyn eison

>> i think it's a little bit of the baby being thrown out with the bath water here. if alpha gets above that $100 i bead a buyer. >> guy adami >> you have frank holland at 6:00 that's a line-up, mel. i think it gets up to 60. >> that does it for us here on "fast money. ptnsctn"s mi uere. "oio aio icongp next e mad they gguy 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 and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis.

welcome to a special "options action. yesterday the dow plunged over 800 marks. all the investors rushed the exits of the crowded tech trade. with us tonight carter braxton worth, tony zang and mike khouw. carter, where have w