>> tyler, we're picking up steam. apple up 6% as we head to the close. st. >> if not into correction territory for whatever that means. it goes down right now another 3.4% or so >> yeah. 10,850 is the level to watch there for the 10% correction tyler, it's been a pleasure. thank you for watching power lunch, everyone. "closing bell" starts right now. >> welcome to "closing bell. stock losses accelerating. the dow dropping 600 points. nasdaq leading the losses down 3.5% take a look at what is driving that negative action sharp selling led the markets to historic highs apple is down over 5%. tesla down nearly 20%. chip stocks big losers as tensions between the u.s. and china continue to escalate and while there is some rotation happening, all 11 s&p 500 sectors are lower including the banks despite having underperformed for so long

more on all of this massive stock market volatility with 59 minutes left of trade. coming up in the show, we're down 2.5% on the s&p 500 >> and we have a big show coming up for you today we're going to talk about all of those things that you just mentioned. we have former cisco ceo john chambers coming up we're going to talk about the comments from president trump about potential decoupling between the u.s. and china and you will not want to miss what he has to say he previously used to run major multinational organization that operated both in the u.s. and had a small part of the business in china and then on today's selloff, you want to hear from mike novogratz the ceo and founder of galaxy digital. he said there was a frenzy in stocks he called for major selloff and what do we have on our hands now? we'll hear what novogratz has to say now. >> let's get to the big stories that we're watching. mike santoli is tracking another

rough session for the market phil lebeau is following major moves in the vehicles and ev space. so where retail investors are putting money to work or removing it from from working is t.j. ameritrade. >> let's take the measure of the damage here. take a look at the s&p 500 at the lows to day, about 3333 7% or a little more than that off the highs. so it's still in routine pullback mode. verging on something a little deeper than that what else is significant about that area around 3333? it's about right here. i point to this number it's august 11th there is no textbook definition of an overchushoot in the marke. we got a steep acceleration in stock prices the take dday of the tesla stock split. it took on character to it at that point we have given back just about all of that. which does suggest that obviously some correction was needed a little froth being skim add way. it's not clear that more than

that will be necessary this was in late june to compare the two. nasdaq, steeper on the joup supe i pointed out the nasdaq 100 had bounced off of this roughly, you know, four week moving average that was the short term trend line you see we're below it now and so the next stop would be, you know if if you have to care about technical levels, it's a good deal below this under 11,000 for the 50 day. the s&p 500, another 1% down that is the technical backdrop we talk about the prospect for rotation they're giving up capital that will be allocated some where else this is the equal weighted s&p 500 against the nasdaq 100 this is just the ratio of those two things over the last two years. you see this just kund of feind off a cliff. it doesn't look like a lot so essentially, you haven't done

much of anything to change this trend. but there is a shot that this is a turning point and maybe this is going to be a little bit more of an enduring come back for typical name in the market >> mike, to that point, the potential for rotation, clearly if you look at certain sectors falling less than tech and tesla is falling but it's not like they're actually rallying. so it's not outright money out of one and into the other. >> no. that's never the way it works really but it is relative performance retail is up today you also take a look at transports, airlines working so actually, there is a subtle reopening trade occurring today even in the midst of what otherwise is pretty wide scale sell >> the banks down 3.5% thanks we're seeing some wild swings for electric vehicle stocks. tesla tumbles.

>> when is the last time you saw a deal and someone sthed aid th a good deal for both companies and that's what we're seeing for nikola and general motors. which is the last time gm was up 8% it is up 8% after this deal announced it's going to take 11% stake in nikola. benefiting by the tune of about $4 billion thael have the electric bickup truck built by gm. it gets access to their expertise. the chairman talking to us on squawk this morning said this is another example of what investors want to see. >> i think the world is rewarding those that are changing the world for the better they're kind of tired of some of the old legacy philosophy where it's like okay, all we do is build cars and the more cars we build the more we grow >> well, they're thinking it's going to be different now with general motors take a look at shares of tesla down more than 19%

stat of the day. tesla is now on pace for its worst single day since 2012. guys, you got to go back eight years to see another day where tesla was down more than 18.5% right now down 19.5% >> mike -- excuse me, sorry, phil clearly it's been so hard to pinpoint any of the factors that have driven tesla stock higher let alone explaining why it is pulling back but the exclusion from the s&p 500, what level of surprise do you think there was when it wasn't included? >> decent. i think most of the surprise is with investors it went from it could be included in the s&p 500 toa forgone conclusion it got to the point where i would occasionally hear from people that say now soon it's going to be in the s&p 500 i say well, you know, they have to review it it doesn't mean it's a slam dunk and mike talked about this it's not a slam dunk all the time so i think that's the surprise there. for the average investor who

we're counting on this income the s&p 500. >> all right phil, i know we're going to be discussing that later on in the show quite a stunning move for tesla. we want to get back to the broader market and the down turn for stocks on the whole as the selloff carries into a new trading week now the summer is closed behind us joining us to discuss is the chief market strategist at td ameritrade good to see you. so a lot of the high flying tech nau names are the names that your clients were buying throughout the summer what are they saying now >> well, you know, if you take a step back and michael talked about it there, you know, we're getting back to levels we saw in mid august and if if you look over time, actually say the trend is your friend, for the last ten years, it's actually paid people to buy dips of what's interesting to me is that some of the stocks that you would consider more stallwarts in the technology sector, we're seeing our clients buying over the last couple days on these dips

starting, of course with, apple. that is still number one health stock at the firm. and microsoft. they're the two that sort of lead the way it was interesting to me last week or seems to be a little bit of a dichotomy for people figuring out does this mean the end of the stay at home trade and the beginning of something more as michael talked about or not? because peloton was a buy for our clients last week which i find interesting because at the same time, a stock like activesion was a sell so there is really a few different questions going on right now in terms of what does that mean? we're seeing people as you said taking money off the table from many of the stay at home stocks. not necessarily putting it on a big way yet in others. but i wonder if some of that has to do with so many people seeing their kids back to school now, thinking that okay maybe i'm going to go back to the office soon also?

>> many hmost schools they're still trying to figure out virtual learning peloton is up 10% in that ballpark earlier today but when you say the trend is your friend, i mean the handful of tech stocks have now grown to become about a quarter of the overall s&p 500. and so if they start to crater, what does that do for the broader market and do you feel comfortable holding the index itself >> i think, yes, it becomes a very difficult thing to hold overall. it's one of the reasons that, you know, hopefully we see many new entrants into the market they actually understand what they're getting into yes, it does become much more difficult to hold the overall indices. if if you do, maybe you're getting a little bit at a time gaenting a better opportunity to buy things if we continue lower. but overall if, you look at

stocks like apple, microsoft, more well established if if you will technology stocks, you also have to look at your time frame. this is not a two or three day trade. for many people, these are stocks they're going to hold on to for a long period of time i also think the bigger question investors is asking themselves is this a short term play that i'm playing the next couple weeks or a longer term play that i want as part of my portfolio i think that's often the part of the conversation that gets lost when we start talking about some of the names that are being bought and sold. you know, obviously some of them are more short term plays. you can see that but i think that some of these particularly going to get more established technology stocks become longer term plays overall for folks. >> j.j., we always talk to you about which stocks in particular your clients are buying and selling. what about options have you seen a big spike in people buying options to get access to the stock market and is that been across all of your investors and retail investors

>> you know, we've had had a big options trading part to our firm for many years if you look at our last quarter earnings, it was about -- just above 20% of our overall trades. 22% the quarter before that. so as you see more volume, sometimes the percentage of options volume or futures volume may be a little bit lower. but we also set records last quarter for the amount of trades made in each so to that, yes, we spend a lot of time on education as i think does the option business in general. so that people understand what they're getting into some people make bad choices unfortunately that happens in everything in life but we saw, you know, our education and options lift three x in terms of people trying to come and learn with the biggest course that people are using is how to trade options i think one thing you have to be

careful about with options is people say oh, they're selling microsoft or something they may have stock against it so particularly some of the bigger stocks. you're not sure what the other side of the position is because they're a derivative the less the volume and the options probably easier it is to pick up what people are trying to do overall. but that was i long wind wade of answeri answer your question we continue to see strong options trading overall f i look at the names at the most popular options names last week, apple, tesla, amazon, microsoft, bank america. you know, five names that you would expect to see really heavy options trading in and that's exactly what we saw j.j., thaufrpgs fnks for joinins we're close to the session lows down 570 points on the dow down 400 points or 3.6% on the nasdaq after the break, with those tech losses continuing, we will trade into the close we'll discuss the outlook for chips, hardware and software

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the nasdaq is set to have the worst three day drop in six months joining us is the chairman from cisco where he was the ceo for two decades. great to have you with us, john. >> it's a pleasure nice to meet you even though you're from unc, kayla and i'm a dukie. >> john, maybe we'll get to that in just a moment we're certainly going to get to the u.s.-china tensions. b but just first off, did you feel a pull back in the nasdaq was warranted as things got stretched to the upside? >> when i think about the nasdaq, i think it is going to be the place to be over the next decade i think high-tech stocks will will dramatically outperform our normal traditional businesses. and that as every company

becomes digitsal, i think technology is going to be more and more important to businesses and consumer so i may not have the expertise that your earlier guests on your show had, but in terms of if if i were betting on the large tech over the next decade, i think it's a very good place to be in the marketplace. >> do you think more so relative to traditional parts of the economy in the next decade than it already has been in the past decade >> yes, i do i think tech will outperform the traditional broad section of the market by 2-1. the big tech players, you talked about number of them, that is just use microsoft and apple assen as examples the if you watch prior generations of large tech players, these companies, the big five, have reinvented themselves again and again and again. i think the odds of them having great future is very good.

>> i'll acknowledge your tobacco road commenter and chuck robins did go to unc. the company did course correct good on you. >> that is fair. president trump made a comment the other day about a potential decoup decoupling between the u.s. and china. it could have been an off hand remark it is a word floating around here in washington and all across the united states where people wonder what that would look like and when it would happen and what it would mean for big companies that have businesses over there. do you see that as being realistic? how could that potentially play out? >> kayla, i think in the long run, the u.s. and china have to have new rules of the road they have have guidelines and both organizations win on it todays a win-lose relationship and understand i came out of wang laboratories, a chinese company here in america. i learned how to do business in

china 35 years ago the position we have to get back to both sides winning, play by the same rules in china if we're selling american companies there that the chinese companies want to play here in the u.s. and i think it's about time we dealt with the issue rather than kicking it down the road in the long run for the two largest economies in the world, it will be one, too, but for the foreseeable future, it's in both sides' best interest to find a way to work together i do think we have to get some -- over some of the hurdles about an equal playing field, about intellectual property perfection, et cetera, and they have to be dealt with. my own advice and my own startups, i love china i've been, like i said, there for 35 years, i'm recommending my startups avoid china for now. >> john, how worried are you about taiwan being drawn into

this it's an important source for a lot of tech supply for the u.s >> i'm not. >> yeah. obviously not currently included in in the sort of key question marks. it's no the part of china. but what about the likes of tsmc get drawn into this more centrally? >> as a company, when i was at cisco, we invented the outsourcing of high technology we developed wayne-one relation within china which he was the president at that time and that was in mid 1995. it worked well for us for the next 10 to 15 years. in terms of semiconductor capability and the ability to xrur your own fab plants, it's extremely important those are independent source ws we have to go to. i think it's in the best u.s. interest that they're independent in terms of the direction. this has been something that's been a topic ever since i

understood china hopefully both sides will find a way navigate through that and not the semiconductor industry in a no win. does it speak to u.s. must lead in certain key technologies, 5-g, artificial intelligence, cybersecurity. so i now think that a national agenda for u.s. tech leadership where government business regardless of political party works together is an all of our best interest. not just economically, but in job creation, in terms of standard of living for this country. >> john, to be shower, both parties platforms currently include a push to on shore manufacturing from outside the united states back here in the united states. but you remember well this is something that previously the administrations tried for a very long time to do and it was just too costly they couldn't provide the right incentives for company to actually do that what do you see as the right incentive to get companies to bring their manufacturing back

to the united states >> you said it absolutely right. the businesses need to sit down and outline how do you win on both sides because the labor for most of manufacturing is not a key determining factor, so much of manufacturing is going to be automated with artificial intelligence and big data applications it's how do you create the environment for a digital u.s. with manufacturing here. this may surprise you have, an interesting parallel on a developing country, an ind ia a an example, prime minister mody's platform his country and for the standard living increase is build around a digitsal india, a digital manufacturing in india and supply chain, et cetera i think the u.s. needs to have more of a concerted effort to say how do we lead in these competitive areas and how do we do it together in terms of making the difference? i think the challenge is when we can work through

you have to have the staying pourer >> that seems like that is a conversation that is going to be happening in full force in the coming months. we appreciate your input on that john chambers, the founder of jc 2 ventures and perpetual good sport. thank you for joining us here on "closing bell. >> thank you very much >> all right with about 3 minutes before the closing bell, dow and s&p 500 are both near session lows after a bruising selloff throughout the day. up next, the energy sector taking a big hit today as crude prices plunge. we'll discuss what is behind that move when "closing bell" returns.

the energy sector taking a leg lower today, the worst day since june as crude oil prices plummet. brian sullivan has a look at what is behind the move. what you are seeing, brian >> kayla, it it's what is not behind the move, zero. there is so much to talk about

if you want to find any bright spots, i'll have one tend. you have a lot of things working against oil. everybody i talk to today said don't look at it as oil collapsing look the it as oil should not have been where it was in the mid 40s. dlart w the dollar was weakening sending oil slightly higher. the dollar firmed up a bit you also have terrible jet fuel demand jet fuel is 30 to 35% of use of oil. remember that. and, you know, more people are flying than a couple months ago, cayla, but still down 50% for the numbers of last year if not more than that so you have the jet fuel issue as well. you also have a couple refineries in louisiana that are still shut down by hurricane laura. phillips 66, citgo lake charles. that is hundreds of billions of barrels that are not buying in the open market. inventories may rise the saudis also reportedly cutting the selling prices every month. they adjust what they're going to sell the barrel of oil for.

mostly the asian buyers in india and china as well. they roertedeported cut the oth things et the only bright side i'll say is shares of april rl down three times more right now so if you want to find any bright spot, it's that the oil and gas stocks are actually holding up a little better in some of the faang big tech stocks are bri brian sullivan, thank you very much for that. a pair of year to date winners will we'll bring ut numbers from louisiana lemon and slack and expert analysis, too, when the numbers cross. we head to break here's a check on bonds. ♪

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31 minutes left of the session. the market is down 3.4%, 382 points on the nasdaq the low of the session, down 440 points a little off the lows. still sharply lower. let's have a look at individual names that are in fact gaining today. shares of beyond meat are higher after the company said they signed a deal to open production in china additionally, starbucks said they would add offerings from beyond meat and impossible foods

to its menus in in asia. beyond is up 6%. peloton popping after cutting the original price of the bike by 24% they announced a more expensive bike model as well as a lower priced treadmill the stock is up 5%. >> all right time for a cnn cbc update with e herrera. the. >> here's what's happening at this hour. three teenagers have been charged with murder in the fatal shooting of a cleveland police detective and another man during what authorities was a robbery attempt. r. kelly was denild bail by a federal appeals court. kelly remains a flight risk. he sought bail for a third time after being attacked by a fellow inmate a new study suggests that children giting hospitalized at the same rate for covid-19 as well as the flu. the scientists did notice a sharp drop in the number of flu cases after schools were closed.

and speaking of staying at home, for the first time ever, a majority of young adults are living with their parents 52% o 18 to 34-year-olds were living with their parents in july can you see if if certain more demographic groups are more likely to stay out on their own. you're up to date. it could be because some people lost their jobs so they moved back in with mom and dad who knows. but don't downsize yet. >> yeah. st when you get the worst economic data since the great depression, you have trends that are the worst since the great depression right there it's a stunning statistic. sue, thank you you got it >> with a half hour before the closing bell, here's where we stand in the markets right now the dow is down about 489 points or 1.75% the s&p 500 is down 75 just more than 2%. the nasdaq is down about 3.5%. the russell is actually bucking the trend. best of the averages, down only

about 1.2% up next, galaxy digital's mike novogratz made a bowl call on tesla and tech last week so far, it's been spot on. we'll get his updated thoughts next tonight on cnbc, tune in for a special program, "path forward: race and opportunity in america" hosted by jon fortt. the lineup of guests is ursela burns and many others. we'll take a look at the underrepresentation of black workers and leaders in corporate america and hear ideas and potential solutions from ceos, investors, entrepreneurs and many more including as i mentioned burns, john rogers, dick par sons and ron williams that's tonight, 7:00 p.m. right here on cnbc [squeaky shopping cart]

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the market taking a tumble today extending the losing streak the nasdaq down 8% over the past five trading sessions. last week mike novogratz was tempted to stop buying tech stocks here's what he said. >> we're close to the end of the second auto you lar frenzy you look at the price of tesla the last couple days, and if you go back to 1999, you look at qualcomm which was the bellwether stock of all internet group. you know, qual qualcomm had had a split and the next few days it exploded up just like tesla and marked the high for the whole

cycle. i think we put the high into tesla through the whole cycle and we're going to unwind this crazy leverage >> tesla is down 30% since that interview. mike novogratz joins us with his thoughts on the selloff. thank you for joining us a lot can happen since you were last on. clearly, you were right to call a top. how you are feeling now. the news came over the weekend and the big option call buyer. was ma son and his team, i think it's important it was just another example of speck

spe speculative froth. now it's to sell the rally the psychology has to change anticipate it is slow to change. people made lots of money buying the dip. and so i think you're going to see more pain, not a straight line like we've had had. we bounce off 11,000 and go up a little bit it looks like nasdaq is going get to $10,000 >> that's interesting, mike. to hear such a level of conviction that this is a real change in people's mindset and that it's now a sell the bounce type market. what gives you confidence that we've made such a big shift and that this isn't just a brief blip i mean we're still not below august levels, for example >> yeah. no, it's -- we had so many data points pointing to speculative froth from it becoming a legend

with his, you know, kind of comical predictions saying i'll crush warren buffett and doing it for a little while, right to the tesla many pania. look at peloton, it is trading at $30,000 per customer. we never had a stock trade that expensive. so i think this combination that we had had of the covid-19 and the story stocks that ran up just got to the levels that are unsustainable. you look at any bubble that pops, it's not a pretty sight the next six to 12 months. >> so you think this could last until potentially this time next year and if so -- >> well, no. we have an election coming up. i think we have an election coming up which is going to be a lot of volatility. i don't see great outcome out of the election i think biden is going to win

and taxes are going to go up i think stocks take a hit on that there were a lot of stocks that were not wildly expensive. i think the big tech names that grow this market have seen the high for the year. just look at the chart of the nasdaq you can't find another chart that goes straight up. and so that's what usually happens at the end of great rallies. >> apart from bitcoin which we know you're a bull on. moving off that, i know you were short the dollar against certain currencies at least what do you make of the dollar rebounding? >> bitcoin came back a little bit. when you have a risk off, people deleverage i'm impressed the dollar hasn't

rallied more if you look at the march example, we had had the big selloff, the dollar really rallied. the i think this is just positions being washed out of the three assets i think they're going to be dip buyers i'm happy bitcoin is holding 10,000 here. i actually bought more gold today. i sold a bunch of gold and buying more today. i'm not re-entering the dollar yet but i'm waiting. i don't think it's far away that we'll see the dollar start selling off again. so what will happen is decoup decoupling >> warren buffett always says it's when the tide goes out that you see who is swimming naked. in this particular selloff, the names that are selling off the most are companies like apple and microsoft that have hundreds of billions of dollars in cash and equivalence massive revenue streams and consumer recognition. do you think there say class of companies where if there is an outflow of capital that they

will be extremely troubled and what you would urge investors to do about those companies >> listen, i think there are a lot of great companies that traded at crazy high valuations. tesla is still a great company they raised $5 billion more. they have no debt issues they make great cars the valuation got insane i look at wing stop which is off $30 probably from the highs or more which is growing like gang busters. but got a valuation of $5 billion for a chicken company didn't seem to make sense. this is mostly a valuation thing. partly because debt is so cheap for most companies, i don't think you'll see a solvency issue for most of the companies that people are talking about when trading stocks. >> mike, i want to touch on gold in the march selloff, we saw gold trade down as well as people just, i guess, dwrabed

f grabbed for anything they could sell you think that wouldn't happen this time if stocks sell off considerably more? >> if stocks sell off considerably more, gold might go down some. but positioning length wasn't as big as it was in the equity space. st everything is getting squeezed into those story names. and so i think you have some positions to burn off which you've already seen. we went from 2060 down to 1930 or 1920. could it go to 1850? of course it could but it doesn't feel like the story for gold is over we haven't seen the 12 month highs in gold. >> mike, thank you for joining us >> appreciate it. >> after the break, another rough day for apple. plus a look at what sent boeing shares lower today those stories and more when we take you inside the market zone. a reminder, you can always watch or listen live on the go on the cnbc app we have 18 minutes left of the session weefrment down 3.5% on the nasdaq the lexus es.

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just under 15 minutes left in the trading day you're now in "the market zone." mike santoli is here to break down the crucial moments of the trading day. let's kick things off with the broader market the nasdaq on track for the worst three day performance since march. down now 425 points. so getting back close to the lows of the session which is down 447 mike, i mean, down 4% or so. that is headline grabbing. we had legged up so aggressively in august. we broken out of more than just a sort of small pullback >> on the verge. minus 10% left is where the first buying of the dip happened in the morning so it seems like people are

looking for a chance to say that might be enough for now. but it's difficult to say. i do think the upside overshooting in august is aggressive so there is no saying that the pullback will be limited to this the s&p 500 is we're now back that old february high so people are going to be able to start to say, wow, that was a false breakout to a new high and maybe mostly because of the tech stocks and not much else but still, it's a contained about 7% pullback from there i don't think you can make too many broad generalizations about it interestingly, it's no the seemingly like the market is making a bold statement about the economy. it doesn't seem very macro driven it seems positioning and technically driven there is no buying panic in treasuries or anything else like that going on as the dollar bounces a bit. >> it's not macro driven, is there a moment that stands out as representing the top and sort of serving as the catalyst of this erosion of sentiment?

was it the tesla stock sale? a particular downgrade what is it >> i think it's an array of the factors. the stock splits it was this sense that there was just this really irresistible upside once the market got kind of extended and overbought, it got more so. i do think that tesla share sale was very well timed for the company. they got a $5 billion at relatively stiff valuation so i think all those things coming together pretty much said that you had an all in moment. and beyond that, i don't know how far it has to unspool. i will will say this market has mostly surprised people in the direction of kind of being stronger than expected as opposed to having a greater kind of purge than expected on the down side. >> of course not just tesla. apple is also down charlie, you think they're great companies but not great stocks

tell us why. >> well, in history, there are just lots of examples of this. my favorite is in 2000 where microsoft was trading at 38 times earnings over the next 11 years the earnings tripled and the stock went down 25%. there is nothing wrong with it as a company it was just there were a lot of things wrong with it as a stock. en that is exactly the same situation we've got with tesla that's exactly the same we've got with even some great companies like apple they're wonderful companies that are going to grow. but you're just not worth the current stock price. >> all right we're going to keep that conversation going we want to dive into tesla more. shares tumbling after left out of the s&p 500 in the latest rebalancing. despite reporting four straight quarters of profitability, let's bring in an analyst that has a hold rating on tesla we learned it's not just the earnings but the quality of earning that's matter when the committee makes a decision about what to include.

>> yeah. i'm not privy to precisely what the subject tist was in terms of them not getting in. clearly though you're seeing a retracement in terms of the momentum adds a result here. >> in terms of the scale of the pullback and what factors might explain it, we've had had a lot of people talk about the stock split. a lot of people talk about the expectation that it was going to enter the s&p 500 and then missed out do you think that those sort of wild card factors explain this volatility >> as your previous guests -- i think charlie gentleman that was mentioning, you know, a stock split doesn't change value at all to the kmocompany. you're opening yourself up to potential -- a different cohort of investors largely retail so what you saw was a momentum that, you know, was kind of perfect timing of a few things

coming together and the company grabbing some cash in the process. you know, what we're focused on just as a fundamental analysis is we kind of want to see what they're going to say at their battery day coming up. and then be able to vet how realistic those expectations are in determine whether or not this pull back remains -- represents a buying opportunity for -- or remains overvalued >> what do you see as the value of this stock at present without any of those delivery targets actually having been met or announced? do you think that having fallen 30% in one week for where tesla is today is fair value >> i mean, you've seen a massive decoupling with the liquidity. you have to address the condition head on.

we take ip to $435 >> we're seeing a tracement. it is perfectly back to where it was. and in terms of how i position that and what is the next leg you can encourage investors to look at the supply chain thank you so much for that >> there are money coming out of the tech stocks and looking at a couple of trading days and it is driven and any of the undervalued stocks that there is clearly money coming out across the board. and that was pretty nicely here.

it is driving and the rough stocks things are better. it tends to take a long casualties with it so right now we're encouraged that people are starting to pay attention to value so clearly they're not paying any attention to value for last couple months. >> josh? >> so another down day for apple. the stock is down 15% from the all time high. that means some losses for big name shareholders. warren buffett saw the apple stake plunge $21 billion also take a look at tim cook ceo jeff williams and arthur lvenson, their shares have taken a cut too. this say fraction of the gains that they have enjoyed

apple stock is up 60% this year. about 120% over the past 12 months guys, back to you. >> josh, thanks so much for that charlie, all else equal, what do you need to see apple fall further to be a buy yourself >> it has a long way to go i'm still kicking myself for not buying in that fraction of a second when it was a value stock trading at five times earnings as the people at motorola, as the people at blackberry and the people at palm pilot it's a long way from value here. >> but you get new watches in a week you get new phones in a movement even if it they are not completely game changers for the company, i mean, do you think that there would be a material boost from either of the new product lines? >> sure. it is a big company.

of it's a long way from being a very attractive stock. literally about half if you say what should the market cap of apple be, i'd probably put it in the $1.3 trillion range and we're still above $2 trillion i think last time we looked. >> yeah. goldman sachs had a note out this morning with some similar sentiment. we'll get to that later on in the show boeing also one of the biggest drags on the dow today >> questions surrounding the dream liner, they announced the august orders and deliveries and when it comes to deliveries, the company said they're slowing them down because they're doing inspections of dream liners that are built but not yet delivered. they did deliver four in august. meanwhile, the faa is investigating the production issues surrounding the 787 dream liner. specifically looking at the fuselage joints where the fuselage comes together towards the back of the plane. two manufacturing flaws there. that prompted boeing to ground eight 787 dream liners too early to know if this will

turn into a larger probe and airworthiness directive from the faa. but any time you say faa and investigation, it is not good news and speaking of not good news, boeing's orders in august, negative 96 planes year to date, negative 932 planes in terms of orders this year guys, back to you. >> phil, this is a significant development for the company. but passenger traffic for the airlines is down so significantly. you know, if the company were going to encounter another issue with another one of the planes, it is sort of an ideal time right now to have to be introspective and figure this out when, you know, the carriers are not necessarily jumping at the chance to buy new planes anyway >> it's never good to have an faa investigation. look, if it's just on this one issue with the eight planes and the faa and boeing are convinced that it is isolated to what happened with these planes, then

it's no big deal this is a blip it's going to pass over time now if it's a larger issue, you're right about the fact that if there is ever a time when you don't have to worry about people buying a particular plane, this is the market for that but again, given what boeing has gone through with the 737 max, you never want to be in a position where people are questioning the quality of your second most popular plane. and that's what the dream liner is >> phil, thank you so much for that mike, just pivoting a little away from boeing which is down 5% you mentioned at the top of the show, of the cyclicals up to date, the airlines in that bracket. >> yeah. they have been up. there was an initiation, i guess of the group and it seems as if there is some perhaps a little bit of a light at the end of the tunnel at least from some people's eyes in terms of traffic numbers. they have not really back slid there was a decent weekend they're subject to exactly that real time type of glimpse into what is going on but again, it seems like the market is mostly kind oftaking

back the very rapid gains in a high growth area they have a little more traction you wouldn't want to overstate it definitely pockets of strength there. >> mike, with two minutes to go in trade, we're sliding back to session lows what you are seeing? >> they have weakened quite a bit in the last couple hours thment is the split of up versus down volume in the new york stock exchange that's not really a washout. you want to see something like a 90% down side day that says okay, finally, we got the big flush we were looking for. this does show pockets of relative outperformance on the buy side and then again, looking within the sectors, energy versus retail right now had been a pretty -- a bigger divergence you see still that xrt is equal weighted retail index. it is holding up okay.

it's bonn bf 30. it popped above 36 earlier in the day. the vix did. nour it's come back a little bit. even though the market itself has come to the lows, but this is more than three points below the high for the day the volatility market got there first before stocks did. in fact, i know some trading systems say if this is down three points at the close from the high of the day, it's a short term buy signal. take that for what it's worth. >> we'll see if that works tomorrow we're 50 seconds left of the session. it's not working to day. the nasdaq is down 4%. nasdaq is down close to 5% some of the names we've been mentioning throughout the show tesla is down 21%. apple down 7%.

energy financials are doing badly. all 11 sectors are lower utilities and real estate the best performers. the they're down 1% themselves the s&p 500 is down 2.8% the dow down 640 points or 2.25%. red across the board tech is leading that selling at the close, cayla down nearly 5% for the nasdaq 100. >> and welcome to the closing bell i'm in for sara eisen along with wilfred frost and mike santoli, senior markets commentator with us as well the dow, s&p 500 and nasdaq all sliding to day the dow down 632 points. 2.25%. the s&p 500 down 59 points close to 3%. the nasdaq leading the selling down 465 points. more than 4% the nasdaq 100 down 5% the russell 2,000 which has been

selling even as the rest of the broader market has been up is selling again today as well. down 30 points or 2% for that average. investors now turning their attention to earnings from louisiana lemon and slack which will happen this hour. we'll have instant analysis of those results as soon as they are released joining us to talk about the market today, charlie is with us, head of invest ments at aerial investments alley mccartney from ubs also joins the conversation i'll start with you, alley what do you make of the third day of selling even after a long holiday weekend? >> september is usually a difficult month. that's been the question that i've gotten a lot of the other question i keep getting is this the beginning of the rotation to cyclicals and back to value? we'll have to see. i think all of the reasons that we have seen the down side volatility over the last three

trading sessions has been said that the positioning, there is about $4 billion out there of premium that has been spent on these mega cap stocks. they've been driven by technicals and positioning and mike san toll ji going over that and also by fundamentals the there has been a huge difference in the value versus growth earnings trajectory right? so the value stocks have been those that have been extraordinary amount of pain that is aerospace, energy, financials and the growth stocks, these mega cap tech companies have been the ones that have been the recipient, the beneficiary of where we are so, look, this is an area where the desks are off. tech nickel ands fundamentals are hurting. what is next does this turn into an actual rotation and beginning of the value recovery >> mike, if you look at the sort

of one year type length of time charts for apple and tesla with the handedly labelled stock splits, it does look like mark at the top there are other factors out there, of coursest but do you think a lot of those companies that may have been considering a sto stock split as those ran into you them are reconsidering it? >> it's unclear to me how many of the obvious candidates were seriously considering it because some of the main ones like an alphabet or amazon seem like they have management pretty well entrenched against the idea of a purely cosmetic, you know, not very rational move like a stock split. be that as it may, i do think though the stock splits fell in with a lot of other factors of this increase, you know, speculative activity you can pull part exactly the events leading up to the little peak all you want. the key is there was bate a bita overchute. what is interesting is you can measure it in the amount of

gains lost or how far back in time you went. so we're down 7% in the s&p 500 a few days you have gone back only four weeks. so essentially the level we closed ato the day is where we were in august 11th, the day of tesla stock split announcement you skim that away the big question even absent any rotation is does this have to be a deeper correction simply because so many of the leading stocks did break stride in major way if you look at apple and tesla. >> but what is so notable about this selloff and i'll throw this to robert is that it's happening at a time where the economic data is coming in much better than expected. we had good manufacturing data last week. record housing numbers a job sprint of is.4 million and seeing this massive selloff in the stock market wet did talk about on the wait up how the market was divorced from the underlying economy. but is that going to remain true on the way down too?

>> possibly. what we're seeing here, and i'll tell you up front, we luke where the market is standing at this point. you are know, we had the market had a great august and giving back some of the gains here in september. what it's starting to focus on with the volatility is, you know, you have a presidential election that is less than 606 days away. it's going to be very close to the end. and as you work through the scenarios of who is in the white house, who has control of the senate and there can be complex. plus, yesterday president trump as he's done before came out with some tough trade rhetoric against china. and the s&p 500 companies are saying what's my revenue opportunities? this is my goldenen goose. and then, you know, also you've had the fact that lack of a stimulus bill has been completed. it's not going to be a complete washout that we have a budget resolution that is going to keep us operating and not have a government shutdown. so we like the market where it stands at this point we understand and we feel the

biggest opportunity is really in confidence confidence of consumers and confidence for their spending and confidence of business owners for capital investment. consumers are holding firm in the spending and also in the confidence lefrl level since the economy reopened businesses have been able to refinance the debt, larger ones at least, cut their costs and preserve cash. and so we think going the next year the earnings on a reduced expense base will probably top the analyst expectations so as we look at this, you add in the fed on hold willing to fight deflation, being there in case the economy stumbles again. finally, you have decent employment factors released on friday and we think there is going to be a grind going forward from here. we like what we see here and we will continue to use this opportunity to buy into the large cap growth stocks with the technology ones as a lead part of your portfolio. but add the value naumz tomes tn

the financial and industrial space. especially ones with dividends, consistent dividends, we like the manufacturing surveys recently and also you've had strong data points on housing and mortgage applications. so that's where we're positioned at this point. >> robert, you mentioned the stimulus package let's give viewers an idea wrf things stand the senate is back in session this week. they will vote on a slimmed down proposal we told you about the stimulus there is insurance and there is a new key program and $105 billion for schools

it's likely to be dead on arrival in the house of representatives where speaker nancy pelosi has demanded at least $2 trillion. he said it is laiden with poison pills. republicans know democrats would never support. senate republicans remaun remain divided and without any democrats this is the best majority leader mitch mcconnell can do here is mcconnell last hour on the senate floor >> targeted proposal, we're going to get the stonewalling of democratic leaders out from behind closed doors. and put this to a vote out here on the floor and it's going to happen this week >> we should note we invited both the majority leader and the house speaker to join us on this program. neither was available. interesting that leader

mcconnell suggest that's this could potentially bring pelosi back to the negotiating table or at least that's his hope even though the words from the other side of the aisle do not seem to signal that at all >> the overall pricetag, i mean, where did it start for this phase of the stimulus? and where is it got down to? where could it potentially get back up to >> optimists suggest that somewhere in the 1.5 to $2 trillion range is the sweet spot any eventual negotiation could land house passed a $3.4 trillion bill in may. the senate then came out with its own trillion dollar package. the white house moved up to 1.3. democrats came down to 2.2 st but they really been at logger heads between this 1.3 and 2.2 figure and so the senate is essentially trying to dare democrats to vote down or not take up this slim down proposal that includes about $700 billion in authorization for these core

programs where there are bipartisan -- where there is bipartisan support so this is an exercise it's much beyond that. but it will provide a marker for republicans. it could be is.25 and 2. there are also many people that believe because they're funded separately and that removes any you are general toy get another system laus package passed >> the other factor might be the stocks selling off charlie, what number do you think you need to see, the market needs to see for your more cyclical stocks to get a short term boost is getting a stimulus bill over the line important in your eyes? >> i put it down the list. we should not lose track of the covid-19 numbers my numbers have been getting better the number of new cases is way down hospitalizations are down almost in half. and so activity by the way around labor day at least

anecdotally was very good. that is a number one factor for the cyclicals. the second one we need is, frankly, the politics. it is a very fluid situation there is outcomes that the market wouldn't like there are none that market loves. but some are better than others. when the polls move that does matter and then i always say this the market is a luittle old fashioned when it likes to trade. so when we start looking like we're going to get angry at china again for all their problems, that always makes the market a little nervous. >> charlie, thank you for joining us robert and ali, great discussion krae kra crazy market day lululemon numbers are out. >> lululemon is bucking the trekked with a strong second quarter. we'll take you through the numbers. eps at 66 cents. a gap number also 74 cents adjusted that excludes a few items. both numbers are a beat.

revenues coming in at $903 million. that is also a beat of $842.5 million the company says that as of august 2nd, 492 of its 506 company operated stores were now open direct rather to consumer net revenue represents about 61.5% of total net revenue it was just about 24.6% of second quarter net revenue in q-2 of fiscal 2019 the company's ceo saying in a statement as trends around the world are shifting to working and sweating from home with an increased focus on health and wellness, we believe 2020 is likely inflection point for retail and for louisiana limb on we're cautiously optimistic with regard to the second half of the year as we continue to navigate the uncertain environment. no fiscal 2020 outlook, of course, due to covid-19. the conference call kicks off at

4:30 will bring update. >> thank you the more analysis to come later on in the show when the world gets complicated, a lot goes through your mind. with fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. that's the clarity you get with fidelity wealth management.

ynchts do you think investors aren't giving this company a clear win as a take away this quarter? >> what we've seen in general is that companies that are doing great in a lot of -- investors that have not done a lot of generallyists bought in generalists say this is great but what happens next, i believe what we're going to see here is the little dip we're seeing now and then the people have done the work and, you know, really get an idea of how good business is and see the stock really start to move again. we've seen this happen numerous times this year with a lot of companies that, you know, get price targets so on and so forth. people get excited and then the numbers come in better people back off a little bit and then it get going again. i expect the same thing to happen here. >> digital sales up 155% the company in a statement they said was cautiously optimistic

about the uncertainty going forward. i mean, any company that has numbers as sky high as that, the comps going forward are going to be difficult but do you think that lulu is cautious enough for the uncertainty that could come? >> well, i think that they're working, you know, very hard through their crms and really understanding their -- they understand their customer better than most. and, you know, so i think cautiously optimistic i would guess if you brought them to the side, they would say they're a little more optimistic than cautious i think caution is needed given you don't know as you mention 492 of the stores are now open, if something causes stores to close in the back half of the year, that could throw a wrench in a lot of things but other than that, controlling what they can control, they're doing it exceptionally well. and as you know, better than almost everybody else out there.

>> what is your take on the -- sorry, apologies it's just sam. sam, what is your take on the acquisition of mirror? >> i think that the mirror acquisition, you know, is really going to allow them to develop what's been coming on as this sort of home workouts and be able to improve the interaction with customers for the customer that's don't, you know, want to come into the stores and, you know, the trainers from what we understand will be wearing lululemon. we believe there is an opportunity down the road to have a virtual dressing possibility where people can, you know, look in the mirror product and see themselves what they would look like in certain outfits and then buy it online the company hasn't confirmed that but nor have they denied it. and given calvin mcdonald's background at sophora where

they've done that with makeup, we anticipate that is coming that will be in the not too distant future mirror as well. we think there are lots of opportunities there. >> sam, given the length of the stay at home economy and the unemployment still remaining at high levels, i mean, lulu does operate sort of in a stratosphere of workout gear there are only so many people that can afford a $130 pair of workout pants. i wonder if if you think at some point the company will will face a certain pricing pressure that will eat away at the margins if if, you know, people don't have the money to spend on the products like they used to >> you have to remember a couple things one, a lot of the people are spending the money on this rather than, you know, going out for dinner, traveling, buying a new suit or a new pair of dress clothing so it's become a new wardrobe. that's number one. number two, they have a lot of white space outside of the

united states. there is tremendous opportunity. three, they really do, you know, they never said we want to commit to absolutely everybody there is lots of other brands out there that sell active wear. but lulu does such a great week of communicating with the core customers. the so bringing in more customers and i don't foresee that as a problem unless -- i'll try again. i don't foresee a product problem nor do i foresee them tripping up on their -- in the inclusive way that they communicate with their consumer base. >> how do you rank overall the direct to consumer offering compared to others like nike >> i think what they do very well is they bring sort of the imab image of the brand to their digital offering i you this they do a very good

job at nuky ike as well. i don't want to pick one they appeal to different kinds of consumers they both do a good job. lulu is very good at having the -- the digital business mirror, so to speak, what is being done in the store. and i think that is one of the reasons why you see such great success this quarter >> sam, thank you for joining us >> thank you >> we've got slack earnings out too. we have those for us >> take a look at slack shares they are plummeting in the after hours. down nearly 15% despite beating consensus on top and bottom line adjusted loss per share of 0 cents. loss of three cents was expected revenue was better than expected, $209 million was expected it was above that. billings, however, this is what investors were focused on. some analysts expectedslack to reinstate its billings guidance. they took it away in the first quarter. they did not do that we spoke to the ceo and the cfo

about the quarter. i asked them why they didn't reinstate that guidance, particularly when some of the peers were and when they had at least a quarter during the pandemic under their belt. they said that macro environment is still uncertain more volatility. st they did say they saw the start to stabilize and start to improve in the last quarter. particularly when it came to those smb customers. the butterfield said the companies reduce the workforce it is impacting their business model and as engagement goes away, they don't end up charging customers but they do expect revenue to show up later on for this quarter, however. that billings growth, it feels like it is really taking the stock down more than 15% now back to you. >> and even further away from its $42 ipo price. thank you. it was another rough day on wall street. now a high percentage of s&p 500 stocks are well off their all time highs up next, mike santoli will look at how much more stocks could

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welcome back another ugly day on wall street. let's get to bob pisani for a look at the stocks dragging the market lower today bob? >> and essentially at the lows for the day. let's start with a big mega cap name bad day for apple and the others they're down essentially 6% or so but microsoft, amazon, facebook, alphabet, all essentially the same declines here the work from home stuff, the sales force, zoom, docusign, all of those numbers also down in the 4% and 5% decline. they're at the lows for the day. this is overall. and we have very healthy corrections going on they're off the 52-week lows they were off a few days ago >> zoom video is down. salesforce is down 15. nasdaq itself is down 10% from

the 52-week high the outside of that, not a lot of big moves defensive stocks, caterpillar, nike this is not a rotation play. you can't say that look at some of the sectors in september what we've been seeing here growth stocks down 6.4%. those are mostly the tech names. but value, i'm talking banks and energy, they're not doing much much at all here tha they're rotating in the other stocks those are companies like hershey, costco, procter & gamble, kroger, they're all down 2% as well yes, tech being sliced valuations being sliced. but they're not buying other parts of the market. guys, luke back to you. >> conserving that cash. thank you. mike santoli is taking a look at how far stocks may fall from

here mike, what are you seeing? >> yeah. specifically looking at the number of stocks that even coming into today were well off the highs. the this is a chart in the s&p 500 that were at least 20% off the 52-week high what is fascinating about this is when you see spikes up here, you're about one-third of all stocks were atleast 20% below the high coming into today the other stocks here were 2015 and 2016 and then late 2018. the entire market was in deep correction and well off the highs when was the overall market, the s&p 500 near record high here, here, and here you had most stocks up there there is a very bifurcated market what does that mean? it means that below the surface it's not as if every stock has been priced for perfection much it's not as if every stock was at an all time high. therefore, if they're pulling back here, maybe the average

stock does not necessarily have to go lower. this does feed into people's complaint that it's been a narrow or at least a kind of a selective market going into the recent highs here. >> okay. mike, thank you so much for that up next, slack plunging despite reporting better than expected quarterly results. nduthat that says from the work from home trade when "closing bell" returns . for as little as $5, now anyone can own companies in the s&p 500, even if their shares cost more. at $5 a slice, you could own ten companies for $50 instead of paying thousands. all commission free online. schwab stock slices: an easy way to start investing or to give the gift of stock ownership. schwab. own your tomorrow.

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by putting people first. we see a bright future, still hungry for the ingenuity of those ready for the next challenge. today, we are translating decades of experience into strategies for the road ahead. we are morgan stanley. shares of slack plunging despite reporting a beat on the top and bottom lines joining us now, da davidson senior analyst thank you for joining us i mean, clearly a bit of a beat on both lines. big move lower in the stock price. is that because investors started to hope that the numbers would be as good as the likes of zoom >> yeah. thank you so much for having me. i think that's exactly it, right? we see the bifurcation in work from home names where on one hand you have zoom putting up a historic quarter you have docusign seeing a big

acceleration and then on the other hand, you know, slack, is i think, still a work from home beneficiary but i compare it to slack is more of a dimmer versus a light switch it's not an immediate impact like you're seeing with zoom because you're not replacing things physically and forcing, you know, to do this this is ultimately a replacement for e-mail a lot of companies that are even six months into work from home are fine using e-mail and don't require channel base real time communication. the i think the longer this goes on the more that works in slack's favor. i think that is it a lot of investors had hoped that there would be an acceleration and pull forward. and that just hasn't planned out. >> has this become where hurt from home hurt slack no the so outright hurt them but acted as a ben foefit to the li of microsoft where those using microsoft are using other rufal service that's microsoft can offer them that are kind of --

they never stride slatried slacy would have if there wasn't such a rush in having these services? >> i think that's a great point. it shows in the numbers. if you look at the usage growth and user growth for microsoft teams, it has been astronomical. if i were to say what is the more constructive way to think about this is remember this is a very green field space, right? you have to ee vafrpg lisay why something new like this? may maybe we're in a case because all the heavy lifting is done by microsoft. you have shops that never used solutions like this and now experimenting with teams and real time messaging and maybe that presends an opportunity for slack as things start to get back to normal and companies can thinking about replacements to say, hey, now that you understand the value of this, slack, we have a way better product here is why you shouwuch over us to maybe it is a head wind.

>> but if this is not the acceleration that the market expected that slack and investors expected, in the opposite of that, the company is saying that not only did things no the accelerate in the way that perhaps people had hoped but that they also saw some detrimental impact from layoffs at companies where they have a strong customer base so i'm curious how you see the overall economy impacting this company and the fact that unemployment is still elevated and the fact that maybe some customers of slack's are feeling that pinch too >> yeah. the i think that's absolutely a major factor you're in a situation where slack, you know, for the fact that it is, you know, increasing moving at larger customers still has a lot of small customers and start-ups and smbs and absolutely with, you know, head count and with kind of pinch on budgets that, is weighing against slack that is a near term head wind

that they're facing. i think at this point it is really up to slack to overcome that by having a strong product by focusing on customer success so that that's not a permanent head wind that they're facing. >> does their antitrust complaint in the eu have legs? either way, does it make a difference for the u.s.? >> yeah. and it's an interesting one. part of the reason obviously they did in the eu is eu is way stricter about this than the u.s. s i think it's more of a kind of marketing sort of move versus anything else i don't think microsoft is going to be forced to sell teams as a stand alone product when it is so well integrated with the microsoft office suite i think in contrast to the microsoft of, you know, 20 years ago, microsoft teams works with everyone else. it works with drop box and with zoom even though both of those are competitors. it's hard to make an antitrust case i think the upside for slack is that it makes customers think a little more critically about their reliance on microsoft,

about how much they're using it, about the vendor lock in and maybe this image of a kinder, gentler microsoft isn't quite true they weren't at the antitrust hearings although the other big tech companies were. maybe from slack's perspective, it's more of a marketing thing versus a serious hey this is going to have business implications zb >> we have to leave the conversation there for now we appreciate your time. work down 18% after hours. time now for a cnbc news update for that, back to sue her air yachlt. >> hello, everybody. here's what's happening at this hour the police chief in rochester, new york, resigned the deputy chief has already stepped down they've been calling for the firing of the two half the death and sufficient indication death of an inmate four more states were added to

the travel list requiring 14 day quarn tees the four additions are delaware, maryland, ohio, and west virginia two previous hot spots have been removed, puerto rico and the u.s. virgin islands. as of now, 34 states and guam are now on that list and in britain, queen elizabeth announcing her return to buckle ham palace and the resumption of royal engagement for thefirst time since march and the early days of the pandemic the move will happen next month after she and prince philip head to the estate for a two week stay maybe we're getting closer to a little bit more normalcy. that's the news update this hour back to you. >> she does have particular ability to still social distance her various homes. >> absolutely. >> just about enough room, i think, to keep six feet apart. >> i think so. >> thank you >> you got it. >> we have news alert on lyft. >> some more green chutes from lyft in what has been a tough year amid the pandemic for ride

sharing. in a filing, lyft says rides recovered in august on a month on month basis, because of that and if that trend continues through september, the company says that they expect that it can manage its adjusted losses for the current quarter below $265 million now that does account for costs related to prop 22 that is the california -- that is the california ballot measure meant to keep the drivers as independent contractors. we just add this is a big if for uber and lyft. shares were up in the after hours on this filing but they have been bouncing around because remember, guys, if it that ballot measure doesn't go in uber and lyft's favor, it would be forced to treat drivers as employees and it could leave california altogether at this point here may not matter as much back to you. >> i know those ride figures though, the white house is watching that and much more mobility data very closely as

they figure out exact wli this economy is we appreciate that update. a new report on masks softbank, the company was fueling the tech rally before last week's big selloff. we'll speak with a reporter that broke that story when "closing bell" returns. ♪ ♪

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softbank was a major call option buyer the conglomerate making bets in the billions that tech stocks would continue to surge. joining us from norway is one of the authors of that article,

mike santoli is joining the conversation as well robin, i'll start with you how much exactly were the positions in terms of size are they up or down because of them and are they still active? any insight into the factors >> well, we gather they spent $4 billion on call options with a nominal value around $30 billion. so pretty sizable. and mostly big u.s. tech names how active they still are, we don't know they could have sold those off some may have expired. way gather most of them expire in october, november, december so there is still probably still there. it depends on when they bought them, how much money they made i gather that softbank is still sitting pretty on a fairly sizable win on the tech this year i'm hoping they hold on to them given how the markets have been playing out these days >> what is your take as to why

they did this? apart from obviously thinking the tech stocks were going to rise it is clearly a step away from what the typical type of business is. >> has a huge departure. who knows what is going through the heads in doing this. it's very different from making big unvestments in private companies, big options trades in public markets it's not what they are known for. now could be sfrat up that they think the market is going higher we want to own lots of tech and we have money to put to work so let's do so. there could be a nuanced strategy here where they're doing a stock replacement trade. where they're actually selling some of the underlying holdings and taking profit on those and then still keeping upside exposure by replacing that stock with options in that case, it would be delta and derivatives traders.

right now we just don't know we know they're really big they're a whale in the nasdaq market and how they play it from here is anyone's guess given that softbank ceo is not the most predictable person in the world. he is a pretty unorthodox character. sure this not what softbank has traditionally done does the vision fund allow the company to do this does the pro inspectous to investors say they can invest in a short term basis in this way or is the company doing more untoward to try to create you havely plug losses from other investments? >> there is an important difference there between the vision fund and a new asset management subsidiary that soft bank set up internal tla is funded with softbank money and some of their own personal money. and that seems to be where they're making these trades. not the vision fund itself that is separate as you say.

>> okay. >> mike in, terms of what this means for the actual broader markets, it was interesting when this story crossed on friday that market bounced from the intraday lows. i mean clearly if that was the reason for bouncing, it hasn't carried over to today. the what do you think it means for the broader markets if we get to know that one of the big call option buyers of which there are many is a big company like this? >> i think it brings home just the magnitude of the activity on the upside in terms of the binge for august, before that too but august is when it got very intense. the casual interpretation of that and you don't think it's incorrect is that largely it was smaller investors, maybe relative will you new traders that were buying these one and two week upside call options sort of lottery tickets, overpaying for them. and that did have an effect of creating a little bit of a feedback loop of further buying as the market makers try to

hedge. all that was known to be going on the existence of soft bank i think really there are two ways to play it one is we're not too worried about a margin call and therefore maybe if it is part of a longer term asset management strategy, it's a little less frothy or a little bit perhaps more stable type money on the other hand, it just seems like a global chase for these high momentum names and something emblematic of a market that got overheated. i think in retrospect we can say that's true. i do wonder if you bled away a lot of that money at this point just base ond what the markets are doing, keep nind, you know, call options only work they only stay in the money. they only hold their value if a stock remains supported at near the highs depending on where they were struck. >> and then softbank becomes a proxy for the broader tech selloff as well. it exercised $4 billion in options and its own stock erased

$9 billion from the market cap clearly investors don't like this robin, do you think there is any pressure on the company to now say exactly what the positions are and fully disclose where this stands or do you think that it can sort of ride off the frenzy and wait until the next regulatory filing period comes along >> in this case, there is clearly a lot of pressure on the company. this is not what softbank is supposed to do they announced they were going to set up this subsidiary. you know, spending $4 billion on, you know, u.s. equity options is not, you know, in the core strategy of that kmchlt and we can see incestors are unhappy. i imagine some of bigger ones will have tough questions for management about how this happened and why this happened and how they're performing so far. whether they get pressured into revealing more details before the next regulatory disclosure

is an open question. soft bank has not always been the most transparent it tends to be driven very muc by son and does he what he wants. he has a pretty good long term track record with him. it is important to note that we gather they have actually made a lot of money on the option trades so far. the question is, of course, is this big conglomerate, should it be run as a poorly risk controlled hedge fund rather than the conglomerate that it is supposed to be >> clearly there is quite a lot more to this story we know you and others will try to uncover it. robin, we appreciate you staying up late in norway for us softbank wasn't alone in getting bullish on big tech right before the selloff. we have the story of some analyst who's made some fairly untimely calls in that space

eric >> that's right. the selloff cut many tech analysts flatfooted. a lot of them had just raised their price targets. in late august morgue an stanley rauzed the prits target price target on apple. and that reiterated that $130 target on august 28. today apple is at $113, down about 14% since the nasdaq high. jeffries on august 26th, more than doubled the target on tesla. up to $500 on a split adjusted basis. tesla did hit $500 before tumbling down to $330 today. wells fargo raising the target to 510 on august 14 and then again on august 20th and then again raising it on september 1st up to a fresh target of $605 nvidia sits in the 475 range today. those late august upgrades looked smart for a few days as we reached the index highs but the past week has more than wiped out those gains for now.

>> and then there also have the goldman call to sell apple back in april right before that stock rose 71% but hindsight is always 20/20, eric netflix co-founder and co-ceo calling disney his company's biggest rival. coming up, find out why he is shocked by disney's soaring streaming success so soon after uninth svice

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reed hastings not pulling any punches in a series of interviews promoting his new book the netflix cofounder was asked about working from home telling the journal it's a pure negative, predicting most employees would return to the office four days a week in the future hastings was also quick to praise his competitors saying he loved hbo and saying disney plus had over 60 million is

fantastic. that's a healthy situation, right, because you continue to push each other to innovate and entertain people hastings will be on cnbc tomorrow morning 6:00 a.m. you don't want to miss that one. clearly, kayla, pointing to disney being his biggest competitor, which is understandable given the growth in disney plus i get a lot of traditional media companies still have big reaches whether or not it's over the top subscribers would want to be considered part of the competitor too >> yeah. not surprising to hear him praise hbo either. a few years ago he said what he wanted to create at netflix was another version of hbo we'll see what sort of anecdotes that book entails. up next, your wall street look ahead. find out what could stop this three-day slide in stocks straight ahead

tonight on cnbc tune in for "the path forward, race and at one time in america" for a closer look at the underrepresentation of black leaders and employees in corporate americand h aear ideas and potential solutions from ceos, investors and entrepreneurs. right now, the worst place to be is stuck in-between. accelerate your investments or pull back? change the plan or stay the course? that's why northern trust is here. with specialized expertise... a history of success through every economic climate... and proven strategies rooted in data and analytics.

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♪ and the happiness that died ♪ i let it get away servicenow. the smarter way to workflow. taking stock of some of the companies that reported earnings this hour, slack down 16% despite the company breaking even on the bottom line and beating on revenues too. working from home is not accelerating as quickly has slack had hoped. lulu now down about 5% in after

hours trading. >> kayla, thanks for joining us and for coming inside so we don't have the dog barking it's a shame we don't have time for you to close out the show for a song with us with your piano behind you. >> i think my 2-year-old is a little bit better at the piano than i am these days maybe next time. >> thanks for watching we're out of time. i'm melissa lee and this is "fast money. guy adami, tim seymour, karen finerman and dan nathan. shares of general motors soaring today. plus, we're tracking after hours action in two work from home darlings we'll break down the numbers later, a magical moment for disn disney we start off with another big selloff on