recovery this time around and not need a rescue themselves, so it's an incredibly important exercise for them, hired thousands of peopleto do it an clearly the results speak for themselves >> yeah, and i'll just wrap it up with another positive week for stocks, guys we saw a little bit of a pullback at the close but a 1% gain for the s&p that does it for us. "fast money" begins now. i'm melissa lee. this is "fast money. tonight's trader lineup, tim seymour, karen finerman and we'll start off with big breaking news on the banks just moments ago, the fed giving the okay for buybacks, and we're already starting to get banks announcing their plans let's get straight to leslie picker with all the details. leslie >> hey, melissa. in an unprecedented second stress test this year the fed said it will allow banks buying back stocks with limitations after they were prevented from doing so earlier this year jpmorgan has already said its

board has authorized a $30 billion buyback program to begin in the first quarter of next year, and that stock popping on the news share repurchases made up about 70% of the industry's capital payout to shareholders pre-covid, but the largest u.s. banks voluntarily suspended buybacks in march as the pandemic-induced shutdowns that roiled the economy and the financial markets. the fed then said in june that all banks subjected to its stress tests were required to halt their buyback programs and cap their dividend payouts now, today the fed said that banks could restart share repurchases expanding similar limitations already in place with dividends these amounts are based on a formula that's essentially tied to the last year of the bank's income now these rules will be in place through the first quarter of 2021 the fed notes they may be extended after that. under the stress test all 33 banks maintained enough of a cushion for their minimum risk right-hand side capital requirements, levels that will

not reset at this time according to the fed mel? >> leslie, thank you leslie picker with the latest on the stress tests here in the after-hours session. not just jpmorgan with the massive $30 billion share repurchase plan announcement but also the kre, the regional bank etf. that's popping 3%. the xlf, the broader financials etf on the s&p 500, that's up by more than 3% karen finerman, this is probably largely expected for a bank like a jpmorgan, and yet we are seeing that big pronounced move in the after hours >> i actually wasn't really expecting it right now to be honest, so it's nice you know, maybe i just missed it i should have known to expect it i'm a little bit surprised that had it didn't come a little bit later, so $30 billion, that's huge that's, i don't know, 8% plus of the market cap of jpmorgan i'm a little bit surprised that they did this now because i don't think we have fully passed

the -- maybe we've passed the worst of covid, i hope we, have but i still think there's more damage to come i think we still haven't seen the end of forbearance and what that will look like. i don't know it feels maybe a tad premature what would be the downside if they kind of just hung on to excess capital and built it up i understand it's not great for your roe and what not, but so i'm a little bit surprised i'm happy. it was just earlier than i thought. i'm happy to be, you know, fairly exposed to the bank stocks good for them. i'm also a little bit surprised that they are allowing buybacks over dividend -- they are still allowed to pay dividends but over an increase of the dividend because maintaining the dividend for bank shareholders or increasing it is a really important thing, i think even more important than buybacks doesn't matter if it was surprising to me it's still very good news. >> taken at face value though, this is surely a vote of confidence in how well

capitalized the banks are and how big those cushions are, tim seymour. i mean, the fed is going to subject these banks to very rigorous tests they have got enough capital it seems like a big green light for investors who also believe, by the way, that this is a big reopening play. >> i think it's -- it's not only a big green light, it's kind of bizarre on the same week where the fed gave you a very dauer outlook for the dynamics of the economy. it's just -- they don't make sense. they don't fit on the same page and the fed is the godfather for these banks here no change in capital requirements i think this is very important i think banks which were outperforming as the yield curve steepened we're getting some sense on the reopening trade, and banks were certainly starting to reaccelerate i think this means banks have a lot more room to go and the banks, the money center banks, focusing on citi and bank of america, first on citi, i think they are the ones with the outside movements now, banks

like jpmorgan, as they were having record earnings, they were also putting aside an enormous amount on loan provisions and the reserve rolloffs are powerful and, again, this is part of where i think the buybacks will be also powerful forgot they had record capital markets in underwriting and fic trading and someone long banks like karen, i think this is very important news for the direction of the stocks. >> sure. >> the messages are mixed to me. >> a big 2021 event could also be the release of the excess reserves back into the system and that would certainly be a good thing for bank investors. we should note that the headline that crossed the bottom of the screen, goldman sachs announcing they will resume buybacks, didn't specify the' nouns, but goldman sachs to resume share buybacks next year that stock moving higher by 5% and wells fargo falls into the category of the 33 banks that were approved to resume

buybacks remember, that it had been sort of put in the penalty box, but it does fall into this category where profitability has been existent for four quarters so it's able to do this brian kelly in, terms of the banks, what do you make of this? >> yeah. i think, i mean, obviously it surprised the market, but i think in the big picture it's probably not that surprising because the pandemic threw the biggest realtime stress test at the bank, bigger than any government regulator could have imagined, and they survived, so i think in that sense it's very positive for the u.s. financial system obviously very positive for banks, but if you're at home now and you're saying, okay, what's next for the banks, that's exactly what you just mentioned. it's the roll-off of the reserves, and there's going to be this interplay between whether or not we get a stimulus package that would mitigate some of the potential losses these banks may have if we don't get a stimulus package, then maybe those lost reserves aren't big enough so that's really where the next crux of the bank trade comes from me, and i think in general

this is just a positive move, and as long as you don't get an economy that goes much, much deeper into weakness, then the banks should be fine. >> karen, your bank position is fairly large, so are you hedging that position? mean, i'm just trying to understand if you are worried that we haven't seen the worst of the credit losses because we just haven't seen the worst of the pandemic or the impact on the economy, then how do you protect that bank trade? >> so i think that the banks being at such a discount to the market and such -- they haven't recovered anywhere nearly as so many other industries. i think that that was already reflected in the prices that they were trading. this is sort of a procedural issue about when would they be able to do buybacks? i just think it would have been more conservative for the fed to say you have to wait so i know in sheila behr were here tonight she would not be happy with

have why not wait why not wait until they reverse reserves, until they let the reserves out, so that part i don't really get as brian said, i don't think it shanks the story materially. i'd be curious did a lot of peel expect this already? if they did, why is this -- why are the stocks up so much? that's four or five bucks is a big move for jpmorgan. >> yeah. tim? >> i don't think the market expected this at all, and i'm surprised to hear it i agree with karen i mean, why did you have to do this now, and, again, i just -- you know, i heard a fed this week that was pointing out the risk to our economy and steve liesman came on our show last night to point out some of the dynamics there look, as banks have at times in the may, june rallies and rotation we said there's something not right. banks are either telling the story of main street they are not telling the story of wall street we don't really understand this

divergence is ominous in many cases, but i -- i think really what it's telling you is that banks have some ways to rally. >> they have other businesses. i mean, as we are highlighting that -- that, you know, the digs connect between wall street and main street, banks thriving businesses have been those of wall street businesses, as you highlighted, imit, the trading businesses, and that's where they really made the deal-making business that's where they really made their money this year, brian kelly, so doesn't it make sense that maybe the banks are in a position now that they have already got the capital reserves stored up to -- to resume the share buybacks and maybe that's why dividend increases are not part of it because dividend increases are permanent. share buybacks can be started and stopped. >> yeah. i think that's a fair point, and i think it really just does go to the health of the banks you know, my view on the roll-off reserves is there is probably if i'm looking at where the odds are, there's probably much more -- there's probably higher odds that they -- the

banks have overreserved, and the market will also look through that, right? even if it looks like it's trending in one direction, i think the market will look through and look to q3 and q4 of 2021 and say, all right, we're going to have this blip sometime in qs 201 is and once we get everybody inoculated, the reopening trade, you won't have to worry about that, and the reserves will roll off, and that will be another catalyst for the banks, and just by the way you won't have to worry necessarily about a yield curve steepening much more. the banks can still make money they can buy back shares and releasing those reserves would be good for their equity. >> let's move on to the other big story we're tracking for you on a friday. tesla driving straight into the s&p 500. the electric car company making a big u-turn in the after hours as it gets added to it the index. here we're down by 3%, this, of course, after tesla hit another record high during the regular session. karen, we've all been watching this very closely. what's -- what's your proclivity at this point when it comes to

the stock? earlier you said you would look to short it. >> yes thank you for bringing up a very painful trade. so i put in an order to short market on close, and then when i saw the stock trading down at maybe 3:40 p.m., trading down, right, ten bucks, i don't remember, 12, i thought, wow, this is not quite what i was expecting how this was going to play out so i cancelled my short, and it ended up the market on closed price was what 695 i think? so that was very distressing that i did nothing i would have covered right away. i was trading in the after hours or monday morning, so i -- i have no tesla position and yet i feel worse than i did yesterday having no tesla position i don't know >> let's bring in our guest from

grace capital. happy to have you here on the panel. amongst the broader trader panel here you're actually bullish longer term. >> i'm bullish on tesla. i think tesla is being priced. it's expensive everything is expensive. new york real estate is expensive. i think tesla is being priced like a monpolice, and it reminds me of amazon, okay you do have bought amazon and you watched it go up and up and up and nobody understood tesla has a market cap that's larger than all the other auto companies combined i think it's got a lot of optionality here, and the secret to tesla, so long as they can keep borrowing money for cheap, convertible stock, convertible debt, the stock is going to work, and the strategy is going to work. >> and they have done that several times this year in terms of shoring up their liquidity position with various secondary offerings, et cetera, in the marketplace.

brian kelly, at one point was tesla ever one of those stocks that you put in a drawer and you leave? >> in fact, what a phenomenal memory you have. in fact, it was one of those, and it's my view on this, and the reason why you put it in the top drawer of you buy the stock and you put the certificates in the top drawer or at least the top draw of your digital -- your digital side table, nonetheless, the point being i think tesla is more than a car company. i think the investors in it are thinking of it as more than a car company. i think this is a play on the decarbonization of the electric grid, the tesla automobile and their automotive department is just kind of the proof of concept, so if you think of this much more as a venture capital deal where all these capital raises are similar -- you know, are like a series "a," "b" and "c" then you can see how much more upside there is to tesla, and i think that's what the investors in tesla are betting in. >> let's bring in gene who is

watching the balance at the very close. the popcorn in hand is what you tweeted, gene. what do you make of the action here what should we expect on monday morning? >> i made the action it's funny i tuned off a minute before the close here i had to apologize that i was remiss at leaving the party just before the fun started, but i expected probably moderate to a little bit on monday, but what's more important is ultimately where this company is going. if i can frame in the panel has done a really great job of highlighting the importance of the story here which first there is no valuation support to tesla regarding their current business, the current remedy of 45 billion a year but when you think of the optionality value, and i'll make it as simple as possible there's seven different vermont calls they will be going after most people think of this as an ev car company, there's aattorney mouse taxis, robot taxis and all the way down to electric jets, and i think

brian's venture analogy is most prince, and i think regardless of what the action is on monday, i think that this company can be a much bigger company in the years to come, and one thing that i just want to -- there's one thing to look at the headlines and listen to what tesla is doing and get enamored about where the stock can go i think there's another discipline which is actually just measuring what's going on in the marketplace we recently looked at the software that's available and becoming available in the next year from the out motive companies across the board, and tesla stands above it's not even close. i won't get into the details of it, but this company has a multi-year advantage in a market that will be turned upside down over the next decade >> gene, you know, everybody is looking at this the event as a forced buying event because managers will have to buy $58 billion worth of tesla stock that are benchmarked to the index for the event and this is a forced selling event and not many people are talking about that and that's what do fund

managers sell to make room for tesla? you've covered some of the high-flying sort of consumer discretionary techie type of stocks that might fall into that category >> yeah. there is going to be a fracturing in a faang. very clear what's worked in the past couple of years and what worked in the past won't work in the future companies like apple are well-positioned in the digital transformation you'll see money inflows then on the flip side you look at companies like facebook and companies like netflix, i think that those are sources of capital for these funds. i think just other traditional businesses are sources of capital, but i think that's going to be a strong theme of this fraction of faang, the simple approach of owning faang won't work for outperformance. there are certainly great companies, but i think tesla is one you just need to own it and don't think about it i like the idea that brian has put it the in a drawer and forgot about it, but i think companies like apple are really going to be a big beneficiary and facebook's got a ton of headwind coming at it in the

next couple of years. >> gene, great to speak with you. thank you. gene munster with ventures. >> thank you. this change will also have a significant impact on the s&p 500 more broadly tesla is now the sixth largest company in that index, and because of tesla the s&p's earnings will fall 1.3% next year its pe ratio will rise to 22.6 times from 22.3 times. the tim, what do you think do you think that investors should be -- will feel this change, the volatility of the s&p 500 will theoretically will go up, too, because tesla's volatility is greater. >> true, and -- and -- but it's also a $660 billion company and conceivably there's more of a buffer built into that, but i -- i think the valuation on the s&p is troubling, but, you know, it you add in a 1,200 trailing pe stock here you know, i would just add to the whole story around tesla which, you know, it's well cron

called that i haven't been a believer here. two events, $400 billion of market cap seemingly stock split on august 10th or 11th took the stock up 83% to a blowoff top at the end of august and then the s&p inclusion announcement from november 16th through the current is another 69%. that's 150% move in the stock based upon two technical events for a stock, that you know, has been about technicals as well, so i think you have to remember that here, and i don't care what anybody says, those are very big factors that will weigh on the stock. >> okay. it's down about 3% after hours coming up, shares of nike also on the move after reporting earnings the company's conference call it 'lbrg way. wel inyou all the details straight ahead much more "fast. stay tuned

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welcome back to "fast money. we've got a rare event for a friday night nike shares popping after hours with strong online sales help the company top revenue estimate the company's conference call is now under way so let's get the trade on this up they also point pointed out that greater china helped the second quarter. we saw sales up there by 24%

cate, what do you make of nike >> i think nike, i looked -- took a quick peek at the quarterly results. they are doing everything they are saying that they are going to do, okay, so they had a good quarter. revenue was up 7% or 9%. the story really continues to be about digital, okay. digital revenues are up 80%, 60%, 80%, 90%, just a tremendous, tremendous number. i think the downdoes sticompanyl have some challenges the nike story is still very important for nike there's a lot of negative sentiment about how they thread the needle nike is still 70% non-u.s. they had a good quarter. it's a great company, great management team. had a tough year, okay they were having a great yore

and then covid had, had to close down stores. things were very tough stock's still up 40% go figure. >> actually gained 20 percent the past months. people are getting more and more bullish. even with the majority of stores closed, it could still grow sales, tim it, and i think that's sort of what investors are so psyched about reminds me of best buy almost, same phenomenon going on with best buy in terms of getting the same sales or greater sales with a into the print that's largely off limits to consumers. >> yeah, and direct sales are up 32%. i would go back to china mainland china is up 25% well in excess of what everybody expected up 8% rather than being negative and we know that china is seen as a preview to what you're going to see in the u.s., so donohoe's digital expertise is shining here not a cheap stock but a stock i stay long. it's been a great year for nike. you know, like so many, they come out of this better based upon trends that were in place. >> all right

coming up on "options action," the last one of the year, counting down to christmas with stocking sffs tueryou might want to add to your portfolio, but we've got your final trade stay there olivia please turn your screen on. okay, lift the... there you go. mondays remote, tuesdays at school... it's the other way around. we might not be able to solve everything. but we can help make sure students and teachers can stay connected to learning. it's why at&t has connected more than 200 million students to brighter futures. (m♪ ic)

time for the final trade let's go around the horn tim seymour. >> let's continue with nike and, again, the app engagement up 80% year over year through know. i think this story continues to be very robust, even at a high valuation. >> cate faddis. >> lower on microsoft news i'm buying texas instruments. >> karen finerman. >> yeah, so i bought some morgan stanley last week and with today's bank news i'm actually going to sell some of my wells fargo on monday. >> brian kelly.

>> well, money is changing, and paypal is rapidly becoming the gateway to that change so i buy some paypal. >> all right that does it for us here on "fast money. do not move. a huge "options action" show to close out the year coming up, we'll be tackling the trouble brewing in transports, last-minute stocking stuffer and the last trade on the latest addition "options action" starts in two minutes. have a great weekend

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happy friday "options action" fans, i'm melissa lee. a nice trading lineup. here's what's coming up on the big show >> pop the champagne and prep those puts it's the final "options action" of the year. funny how time decays. so, as we gear up for 2021 tony, mike and carter lay out their ultimate options trades for the new year, but before the ball drops, we've got to get throug