going to be the leadership area but it it has insulated the market. >> so maybe it is the most important confirmation sign of something. you can't declare that the good times are ahead. >> that is basically it. mike santoli here for his last word. we will see you back here tomorrow. fast money is next. right now on fast money, be aware of big tech. plus, towing the line in taiwan. nancy pelosi expected to touchdown despite some big warnings from china. why she is making the trip and what it might mean for u.s. relations. and the center is struggling all year and we take a look at where it is heading from here. i am melissa lee. we start this

first trading day of august with a bit of a breather for stocks and major indices pulling back a bit after the best since 2020. one of our traders says the biggest consumer is not any of these things. it's that we don't go into a recession. brian, explain yourself. >> it is a bit provocative but, i am giving the people what they want here. so, here is what i am thinking. we just had this massive rally all because the fed, or at least the market thought the market rallied. so the market is pricing in a recession and a pivot. the fed is trying to engineer a slowdown so they can fight inflation. so what happens if we don't get

that slowdown? all of a sudden inflation creeps back up and we accelerate. how do you think the fed will react? they will slam on the brakes again to fight inflation. this is a 1973 playbook all over again. as soon as you let up on the gas, the economy starts to take off. the worst thing for this market, the way it is priced is, you don't have a recession and that implies that inflation starts to take off and the fed has to hit the brakes. >> so, basically, we are too far over our skis in terms of the way the market is thinking. to the point where we don't actually experience the recession that is needed to slow the economy down. would you agree tim? >> i like where bk is going. i think where the market has taken financial conditions, first of all, the tightness in the markets was good for the fed. we went from 345 on the 10 year

and it closed at 257 today. we know it has gone inverted and it is more inverted by the date. this is something that the history books tell us will give us a recession. how severe though? i think we will continue to hear comments from the fed. we heard from bill dudley who said, the markets are not helping the fed and he thinks the terminal rate is closer to 4%. now let me tell you, we went from that june fed meeting where we were around 360 or 370 by the middle part of next year but we are already down to 320 and the market does not expect anything of the fed from december through the middle of next year. weaker data out of china. there is a sense that we do need to see more weakness out of the economy to really put the fed on pause. i don't think the fed will

pause at all. i would be pretty scared if they did. >> you are comparing it to, the blue dress in the gold dress thing. two people say one thing and it was completely different. i feel like that is exactly what jerome powell was. so, you've been arguing that we need to see the recession and better off getting it done and getting it done quickly? >> yes. i think they are nowhere near done and i believe that inflation has peaked. however, inflation needs to come down so dramatically that i think the fed has no choice. absolutely no choice, given that they have said that inflation is the main priority. i think they are nowhere near pivoting. the reaction to the last hike, one would guess that every hike

is a good thing but, i think that the byproduct of that, we have seen housing cool and i think we will see another several areas of the economy cool as well. i am not really buying this rally. i feel like there is more pain to come and we have not released. i am not really buying stuff appear. it has been a sharp rally and i think just a width of that this pivot is not what they are saying being really problematic for the market. one other thing though, i think for some of the stocks, the bottom might be in. >> that is an important differentiation to say the markets versus certain sectors. there are certain stocks and sectors that have rebounded almost fully from their lows. it is an amazing round-trip.

>> it is remarkable and just to stay with the blades of glory, the fed is trying to pull an iron lotus. we talked about the market rallying to 4100 since the middle of june. it is august 1 and we are at 4100 and it is logical that the market takes a pause here and sells off. steve leishman said, he listened to this and he came away with hawkish tones. i don't see any fed pivot in the foreseeable future but 9.1% on that cpi might in fact be the high that we see for a very long time. even if this were to come in with a high six or low seven handle, we are talking about is cpi that is three standard deviations away from the fed where they wanted and needed to be. i think the market will go

lower. >> guy, we have a payroll number on friday. so, let's focus on jobs and employment in the inflationary aspect of that. i think the stickiness, the labor market stickiness is something that i don't think has fully fed into the market. what is their appetite for employment. i think you have to watch that and if you look at semiconductors today, and back to the markets, this is after 26% move in 19 days off the lows. the other side of this, whether the fed pivots or not, if they are less aggressive and rates are higher, this helps too. it whether it should be rallying here, i don't know but this is the conundrum. we go back to the bk blaze of glory. >> rates are lower and people

go back into the housing market because all of a sudden you can get a house for 3%. you make some progress there and, it is the opposite of the fed. those are all things that the fed does not want to see. the byproducts must be that these things go lower. >> that is exactly right and the fed has told you that. they have blown a bubble in every single asset class. housing, stocks, crypto. everybody's balance sheet is better than it has ever been in the employment market is tighter than it has ever been. they need unemployment to go up and they need housing prices to go down. so, i would just say that the hype will continue.

>> we are really bearish today. what is the one thing, karen, that maybe all of use all of you guys are getting wrong or discounting too much? >> i think a quick and significant improvement in the supply chain would help. but, i am not that optimistic that will happen in the near term. i just think we have not heard enough about --. we have not really got the downgrades and a lot of companies have firm numbers. despite issues in inventory, we haven't gotten what we want. i don't want to recession but i want to hear from companies. you can't tell me that apple is not going to see a pullback in demand.

that is what concerns me and has been the trend of the earnings season. if we look at labor markets again, almost near record unemployment, how will you see a recession? this is not technically a recession but this is what we are talking about and this is what we are pondering. the s&p is down 14 from all- time highs. rates at zero and 25% or a quarter of the government balance sheets thrown at markets in the last couple of years with a fed that did not care. i feel like we need to see this longer. the duration of an inflation inspired impact is more like 18 months or two years. we are quarters away from starting to feel the first impacts of the fed tightening campaign. you think about the basis points we have seen in the last

couple of months, that does not hit the economy. >> that is exactly right. the administration came out and said this recession, it is not a recession by the new definition. there is some truth to that but not really. it to your point, the effects of this won't be felt for quite some time. what we saw is the natural progression into what is going to be a slow down. there is a lot of wood to chop. these things last a lot longer than we want them to and maybe nowadays, things move quicker and so maybe not 18 months. maybe it is a year but we are many months away from feeling the effect of what the fed is correctly doing right now. our next guest is not the we are in a recession but investors should brace. let's welcome back dan suzuki from richard bernstein advisors.

you are in good company today. what is your reasoning behind this? and, why is it not possible that perhaps the markets are so forward-looking that we are pricing in a period of time that is beyond the impact of the fed tightening? that we are embracing the period beyond the inflationary period? >> first of all, hello melissa. the whole conversation, i pretty much agree with everybody's comments so far. this debate about if we are in a recession or not is kind of silly. what people are mistaking for recession is a broad-based slowdown. there is no doubt in my mind that pretty much every significant part of the economy is slowing right now and if this continues down at this pace, we will eventually be in a recession but to say that we are in one right now, namely,

the labor market, the market is still strong but slowing. it kind of misses the point. in terms of being priced in, the markets have priced in. but we have the tightening of liquidity and the inflation story and less so the slowdown in growth that some of that has been priced in. the reality is, what recession have we ever seen in history where the fed ultimately cuts 50 or 60 or 70 basis points. i don't think that is a real logical estimate of what the cuts are going to look like. i don't think the stock market is pricing in either. >> dan, after 16% or 70% off the lows rally, many tech stocks are not pricing it in. what have you heard in this earnings season?

i know you were saying there are certain teas including the federal hike and the eps going higher. in terms of the cadence of the market, we are trying to time it and we all believe that some of these conditions have not totally filled yet. what have you heard? >> i heard the same things you heard. basically, things have slowed but not as much as fear and that is pretty much true with every part of the economy. basically, the market braced for some really horrible earnings. it was the topic of river research report for a good three weeks. it was not a great earnings season but people braced for the worst. people with that mentality had that mentality with economic data as well. my issue is not with this earnings season but in this part, were things are slowing, it is not just this earnings season but it is the next.

typically, you are going to see, especially as earnings go negative for companies, you will see more layoffs and more job codes. a lot more breakdowns and that is going to spiral and that will catch people off. >> you are going full defensive. healthcare, staples, does cash compared to this? in your market outlook? >> yes. kind of a barbell between cash and cash like. short duration and then alter long high-quality treasury exposure. right now it is a good time to own a good amount of cash. we have been pounding the table that you don't want an own duration but if the next leg of the cycle is going to be about the gross slow down unless of the liquidity story, i think that makes a lot of sense. >> thank you, dan. >> dan suzuki.

now brian kelly, the last time we talked you said your top drawer was empty, meaning your long-term investments. i'm assuming it still is? >> i have nothing in my drawers. nothing whatsoever. i did buy some -- today. we had 20-30 years of a bond market that is manipulating. so, going to what dan said, if you are looking at yields going lower that is a sign that the economy is weakening so if i had to buy one thing, maybe diaz tnt or something like that. coming up, we will bring you the numbers next. and espresso earnings. starbucks results on deck. we will take a look at how brewers are trading up for this one.

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the company did miss -- julia has this all covered. in a statement, pinterest is a highly strategic business with significant potential for growth

so we are talking about the advantage of knowing what their users are looking for and what they want to buy. that makes pinterest less vulnerable to some of those privacy changes. back over to you melissa. >> thank you, julia boorstin. what do you make of this move? >> it is not a good quarter but, for this, the stock would be lower. that there is still some value. we heard on the street, on july 16, it was probably trading around, maybe four times the riveter next year so it is a little bit more expensive but not ridiculous. despite the move i think, you don't have to chase but, i

think we stay pinterest for the reasons cited. >> and karen made mention of this. what are the companies that bottomed first. pinterest has been grinding around at these levels since yesterday. we have not seen this company challenge the 100-day trade through it in almost a year and a half. so, the biggest debate here, and i don't want to debate elliott, they have been doing this very well and effectively for many years but, what makes this company profitable now? and, what changes? i get that there at a strategic crossroads between e-commerce and social media but, it has not equated. so this is really the question. hearing that kind of an endorsement, that is good news for investors.

technically, this is an interesting place in the stock. >> it is confusing because you have four different ways you can do. >> yes. there is a short interest to the component. karen, what do you think of the move elliott has into this? >> a couple of weeks ago they started and it was a very strong endorsement of the new ceo. it is interesting to me that, the thing about elliott baking the biggest shareholder is the forward revenue guidance of. it is interesting to me that a brand-new ceo would go out on a limb to put that guidance out there. he must be very confident that they will be able to meet it. otherwise, it would be dumb. so, i have no doubt that he is a smart guy. he has got to feel really confident and that is interesting to me when you look at what that what happened with

the last of rest of social media. so this is impressive. >> he would have had a free pass just leaving it alone. earnings out after the bell today and the stock jumped by eight cents per share. courtney regan joins us with the latest. courtney. the shares are higher by about 2 1/2%. they also did raise its dividend by about 3%. u.s. mall and outlet mall occupancy is almost up 94% and that is up from 91.8% last year. ceo david simon says the higher income consumer is in good shape. there is some softness in more value oriented brands but demand for our space is

extremely strong. sales hit a record high and that is up 26% year over year. the company has zero cash equity in that vehicle that is a part of jc penny and a number of other troubled brands that it swooped in to buy or become a part owner of. simon property group gives him a peek into consumer traffic and sales. ahead of some of the retailer reports we can get more of the nitty-gritty details but as he read, it will trade a bit differently than retailers. it will be more sensitive to interest rate changes. they have outperformed over the last week and over the last month. for those following along, they are just --. >> courtney, you thank you.

this is a high-end. so it is a little bit of a different consumer and a different retailer. one thing i thought was interesting is the put out there occupancy at 91.8%. then they put out their average rent f 5503. they did not mention, over what? i had to go back and look at over what. it was last year, higher. >> i just find that interesting. why not just give us the actual data? still, they were not on deaths door but it was looking very bad a few years ago and they have done an extraordinary job in acquisition. i don't own it but, it was a good quarter. it was better than i thought it would be. >> they don't.

think people will go hunt for the figure like a year back. so what does this mean if anything? >> i think it is more of a read on the economy. all of the things that were really good about this quarter, the increase their dividend and the rents are good. 94% occupancy and their retail stores are seeing strong demand. all of those things are with the fed does not want. they do not want that type of strike. what i'm concerned about is, is this as good as it gets? are you not going to be able to get higher rents? probably not. if you are in it for the dividend, good for you but i am probably a profit taker on this. coming up house speaker nancy pelosi is expected to break visit taiwan. we break down the details. and are they grand games in

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it's dr. scholl's time. our insoles are designed with unique massaging gel waves, for all-day comfort and energy. find your relief in store or online. welcome back to fast money. there is a deal at the white house aimed at wringing prices down. we are learning that the white house has held meetings with box retailers to discuss the impact on consumer prices if certain tariffs are removed.

retailer said, not immediately. retailers said it would have been more straightforward a year ago, before the cost of labor and transportation had risen. inflation is broad-based but as soon as the costs for the company go down, they said they would pass the savings on. the meetings took place in mid june when top executives from walmart were in dc for events at the national retail federation. is senior administration said individual said there is the potential for passed through to consumers and they say that economists have models associated with this. the official tells me all options for china tariffs remain on the table and there is no word on when president biden will make a decision. >> thank you, kayla tausche . nancy pelosi is kicking off her trip to taiwan.

she would be the highest ranking u.s. official to visit the island in 25 years. her trip is barking backlash in beijing. for more on the impact, let's bring in the former advisor to the biden administration. it is always good to see you. i don't understand why pelosi is making this trip at the risk of worsening relations between the u.s. and china. why poke the bear right now? >> melissa, that is a good question. i don't think that the speaker sees it that way. there are a number of legitimate reasons why a speaker would want to travel to taiwan. i merely can't to look at the growing gap between the taiwan military and the people's liberation army. and that could, quite frankly, allow for china to unilaterally determine the future of taiwan. it is something that provisions of the taiwan relations act,

which the speaker is in charge of overseeing, to make sure that the administration adheres to and implements that, those provisions are designed specifically so that taiwan would not do china's bidding by force. there are a number of reasons for her to do that. is a principal matter i would say that very few people in washington think it is a good idea to give china an veto over when and where officials may travel. >> this is tim. i would just say that the sphere of influence dynamic, which we know is extremely emotional, there have been all kinds of metaphors used on the bending of the will and playing with fire. do you have to go down this road?

i understand that nancy pelosi is on tour but if anything the message has been about stable u.s. china relations and how they are important for the region. why stop in taiwan when, we knew it would be obvious that this is a difficult issue. is it because china is seen as a common enemy, politically, in this country right now? if anything this is political gamesmanship. >> i think for beijing, they can speak for themselves. i do want to express the importance of, first hand, what is happening on the ground. they have really press the ability of taiwan to make its own decisions about the future. the taiwan relations act is clear about what the u.s. would like to see. it is not a unilateral military change in the status quo. i suspect the speaker is looking at that in hearing more and more chinese aggression

against taiwan. i think it is time for her to land and take a look at the situation for herself. to your point, i do expect that we will see, potentially, some type of military response. i say response because it is not an attack on taiwan. perhaps you will see incursions in the air defense identification zone but there is another thing that we should be mindful of. china has other nonmilitary means to respond. like not targeting u.s. companies with this foreign sanctions act. so, we could see a nonmilitary response but, to your point, this is a real serious issue for u.s. and china relations. i think the reasoning from the speaker is legitimate reasons to go. thank you, for being on. the timing is so curious. do

you think joe biden has given his blessing to do this? or do you think he would rather should not go? >> i am not sure that the white house is necessarily pleased but i think it is her call. but, i suspect the timing is not ideal, to say the least. >> dewardric mcneal, always great to get your analysis. >> thank you, melissa. >> dewardric mcneal brings up an interesting point. when it comes to retaliation, how might this impact u.s. companies? >> that is what it would be. sanctions on u.s. companies from

the pelosi district or other leadership districts or something like that. i am not a political analyst but it seems like maybe she could get the same information but like a skype call and say, is there a big army over there? okay great. there is. i don't buy that at all but, there is the news that just came out from dc that now we are going to let these tariffs go on china. it is a little bit of of this for that. we are still holding china's feet to the fire. that sounds more likely to me. >> guy. >> you make a great point. you have got to believe something is in the works. she is going to one of the hot button places in the world right now so, you have to get

clearance or some sort of clearance. i was just sitting here nodding my head and now it all starts to make sense. you pull back the tariffs if you allowed nancy to go there. the problem here is, if she does not go we look like we backed out. and if she goes full stop we are in their face. so maybe this is what assuages their concern. in oh the last week or so, -- has been seen traveling. no one had seen him for a long time. the question for investors is, how the chinese authorities got what they wanted? did they have the show of force in terms of their markets and does that give them the ability to say, it is investable again.

this is been a roller coaster trading stock . coming up, lots of options on deck. starbucks rings the bell tomorrow and they could be betting on shas ttg asd.regein and we take a look at some of the big guys and the boutiques.

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if the economy is much worse, that could happen but i personally don't believe it's going to happen. >> good to see you. what do you make of the 10-year yield that goes from 3.4 to 2.6 and a matter of weeks and you are bullish on the spread lenders. this can't be good for them if we are at 2.6. >> interesting because if the 2.6 has embedded in a -- and i know the market, they think the fed will be cutting rates by next year but i personally don't believe they will. if the fed gets to a steady level of rates, it will be good for the regional bank because it's not so much our rates, the fed rate 330, 350, it's not

zero and we've essentially had zero for years and the banking industry was not built for zero. if it get back to something more typical, it will be the environment where they will operate marginally and better. that's why i continue to be optimistic. >> clearly an inflection point for the economy and all sorts of banks for breaking it down for us. within but zero is good? and it's not terrible because it's only about ultimately the

value will win out. >> this might be the effective trend with the long growth extraordinary. 5% to 10%. the whole thing come on out of the crisis was encouraging but it's taking a long time to work out of this and with technology, they are giving back the power to make loans with the comfort zone and part of it is underappreciated in the valuation. >> what do you tell your compatriots here? >> they are 100% right with the banks making more money because they are making more loans but making more loans is money creation. it supports the economy and that makes inflation stickier.

if i'm a banker for 20 years and haven't made money, i will make every single loan that i can. >>

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time for the final train. brian and then kelly. >> you can put this one. probably not a bad buyer. >> karen? >> yes. lululemon, i love it but it's getting stretched on valuation. i don't want to sell it but 12 bucks, 342. >> i don't want to talk about

this but i will talk about the deadline the yankees are making. lockheed martin, too cheap in this environment. >> not sure if it will be enough but for chevron, the buybacks are enough to continue to drive this again with a major pullback at key levels. opec this week. >> my mission is simple, to make you money. i am here for all investors. there's always more to cover and i promise to help you find it. mad money starts now. i am jim cramer. welcome to mad money. i will help you make some money. my job is to continue to educate to teach you make money. this is a