her. i just wish we could have talked before all this happened. she could have come to me. but that wasn't god's plan, was but that wasn't god's plan, was it? tonight and options actions, the fed makes no bones about it, rates will continue to rise until the rates are under control. the markets with a sharp friday celebrate the dow moving down over 1000 points. guest. 500 dropping over 3% for the nasdaq falling close to 4% on the day. the ramifications that reverberate through financials and real estate we will drill down on those sectors straight ahead. what is next for the consumer?

is everything in a retail space now more vulnerable in its rising rate environment for longer? we will go inside the numbers but this is options action. i am courtney reagan. this week tonight, carter worth, mike cho, and tim seymour. let us start with a look at today's big selloff for carter, it was quite a day here on wall street. i know it probably spooked a number of investors. what you make of the actions today? were you surprised by the sharpness in the selloff with justice powell reiterating what he had said previously, but saying it was not going away anytime soon, the higher interest rate policy?>> no bones about it. reiterating what he said, it was a status quo week. here is what that means. oil is not going up and it is up again this week. energy is the only sector up. it was up last week. small caps are up, which is to say what is leading on the way down, the s&p was down much more

than the russell 2000. yields did not even move. 2.97 last friday and this friday 3.04. really, it is just that, reiterating what we had known in the market simply reacted. >> mike cho, what you make of that market reaction? was it just a knee-jerk reaction? a sharper move because it is a friday in august? how do you make sense of this? >> well, i think there can, sometimes be lower liquidity as we approach the labor day weekend. although, i do not really think that was too much at play here today. one of the things that surprises me is that everybody is surprised. consider what we were hearing from people, like mary daly, the san francisco fed president for quite some time. she had actually been saying listen to us, we are going to continue to act. i do not think that most people would argue that she is one of the most hawkish individuals at

the fed. how can they be surprised when powell says i am going to continue to do and say what i have been saying all along, this is not alan greenspan that speak where it is gobbledygook and we cannot really figure it out, they are laying out what they are going to do. with respect to the 10 year rate, which is what carter was referring to. one of the natural things we would expect is that the fed does its job, if it manages to get inflation under control and if that does have the necessary side effect, a slowing effect on the economy, actually, what the 10 year rate did, which is essentially nothing, is exactly what you would expect expect carter made that point as well. as i think it through and if i push aside the numbers that i saw on the screen with the way that the stocks are selling off, and i think about what is really happening here, powell wants to get inflation under control.

it is at a 40 year high. he feels like a good thing to do. we all want this to be able to be a possibility. we just do not want to trade off of oppressed economic growth and higher joblessness when we have this labor market that is so strong. should we all get a little bit comfortable with maybe a little bit of that pain >> well, i think part of the pain you are seeing in the stock market is in the retail sector coming from the expectation that higher interest rates, especially on home equity loans and adjustable-rate mortgages and auto loans are things that are very painful on main street. today the message was to the consumer, you are going to enter more pain. i think for the markets, the guys have discussed, the thing going into today, alleys going into this week, the correlation, bond, stocks, commodities have been extremely high. today was not -- you saw the bond market decoupling commodities decouple. we talked about energy. that is fascinating. the point is, when the cost of capital is zero equities have a

lot of leeway to run. you can find growth out in the future. that is really, to me, what the take away is up today. that is why -- as we have talked about, it is where the market has come from and expectations. semi conductors rallied 30% in a month and a half. or even a little bit less. now pulling back 9% to 10%. that should not surprise people, especially on reinforcement of interest rate policy >> let us turn to the financials and dig in deeper. rising rates should be a good thing for the banks, right? but the slowing economy could hurt the sector. carter, you think the regional banks will bear the brunt of this impact. why and what are they telling you what you are in? >> just like you said, if rates are moving in their favor -- i do not think that is the case and i do not like regional banks . look at the carry. yields, so we can see that, that is a big subject of the day. 10 year yields did not move.

2.97. this time we go 3.04 right now. head and shoulders hot. we shall see. the kra, that is the spider regional bank. the first chart we see is the all data chart. it is up into the right. look at this same charge relative to the s&p. it is down to the right. underperforming since the day it was launched. it is not a good place to be overtime. final two charts. the carry it self, the here and now charts, there is the uptrend, a minor type of perfectly parallel lines. where might we beheaded? final chart. we go back to the trend line above which we broke in july. a good five, seven, a% off. >> that is very interesting. tim, what is your take on the regional bank fundamentals here?

>> well, it is interesting. carter showed that long-term chart. the short-term chart they have outperform the s&p by almost 15% . they have outperformed the money center banks by almost 10% . i tend to agree, because my thesis would just be we have not even really got into credit dynamics. regional banks have actually been strong. look at it pnc, which is the biggest way to the bank and is epf and they just talked about strong net income growth. they talked about net income, i should say. even where the income was better than expected. that the income, capital markets et cetera, that i think is going to be under a fair amount of pressure. i think banks are better positioned on credit here and what we have not heard anybody talk about is the credit impact of what a day like today actually could settle into. >> okay. mike, what is the trade here for financials or regional banks? >> one of the things we have

any options market right now as a result of what has been going on our elevated options, premiums. whenever we are looking at how to structure trade around our directional thesis, in this case that is regionals are going lower, you are going to look for spreads. i always look out to november, the 6560 point spread. that was about $1.85. only slightly in the money. i think i days and carry might have been close to $64. you can adjust those strikes, depending on where things open up on monday. the idea here is that you want to mitigate some of the accelerated decay that you are going to get when you have these elevated options premium . >> okay. carter, when it comes to rates there is a lot of similarity between banks and real estate, right? what are you seeing? >> that is right. obviously, again, there heavy users of capital. they are very sensitive to the cost of money. accordingly.

looking at rates pacers the carry. i have a comparative chart here. what you will see, of course, is that they are like railroad tracks. that is a five year chart. the same thing. just to make that point even further, look at the next chart and include the s&p. there you have carryover -- deadlocked. and then s&p. it is the same set up. let us do a few i why are charts on their own. this is the sector. what you see here is we falter. we went below that moment in time, which is a brief covid high. now we are at a rally and getting our head again. so, the final two charts, this is really up close and personal. just three months. no lines, no judgments, no annotations. final chart. that is what my ics. we are right on the trend line

>> mike, what is the trade on the i why are?>> the rates, generally, we have to understand in the rate environment they might be facing higher capital cost. that is a challenge. if there are economic concerns for those that have seen a little rebound, including office rates, which are still down a ton, that is a risk area. residential rates have outperformed, because the landlords have been able to increase rent the same dynamic that i spoke about with regional banks and carry applies here as well, which is the reason i think once again i am looking at a vertical point spread. in this case, the october 98, 80 point spread is when i was looking at and i why are. that will cost us a little over of a court of the distance between the strikes. 321, if you get the trade right. also trying to mitigate some of that accelerated decay you will see in higher implied volatility environment, like when we are currently in. >> fascinating

.com, the high-end consumer was holding out in the face of higher prices. is that changing? more on jackson hole in today's market selloff. stick around for tonight cmac special, the fed factor. we are minutes away from that. that is at the top of the hour. in the meantime, we have got more options actions right after this it's a thirteen-hour flight, that's not a weekend trip. fifteen minutes until we board. oh yeah, we gotta take off. you downloaded the td ameritrade mobile app so you can quickly check the markets? yeah, actually i'm taking one last look at my dashboard before we board. excellent. and you have thinkorswim mobile- -so i can finish analyzing the risk on this position. you two are all set. have a great flight. thanks. we'll see ya. ah, they're getting so smart. choose the app that fits your investing style. ♪♪

wanna help kids get their homework done? well, an internet connection's a good start. but kids also need computers. and sometimes the hardest thing about homework is finding a place to do it. so why not hook community centers up with wifi? for kids like us, and all the amazing things we're gonna learn. through projectup, comcast is committing $1 billion so millions more students can continue to get the tools they need to build a future of unlimited possibilities.

this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these and so many more in the xfinity app.

welcome back to options action. the retail section getting hit by rate increases. the ire and could hold out. but that hope may now be lost. lulu lemon shares down more than 23% this year. there is likely no more trouble heading into earnings next thursday. a call to action across the board. we saw worry about consumers, the consumer psyche and the impact, in general, and spending. >> the first thing i would say about lulu lemon is this a name in one of our funds. it is also, for those of you that watch regularly, you know it is a highly indexed name. the index carries that i track that basically matches what we spend our money on in our household. the thing about

lulu, let us just talk about some of the good stuff lulu is a higher end demographic with more resilient customer base. probably more insensitive to economic pressures that we might be facing right now. the other thing, biggest the company has become is so has a lot of meaningful growth opportunities. they are expanding into but where, men's apparel. throw question when you take a look at a company that is trading at less than 30 times forward earnings and has had topline growth and that income growth is, should we be looking at companies like nike, which is trading at about 20 times are comedies like gasburg, which by the way, owns a competing bran . we have earnings coming up on september 1. now, whatever good things i might say about the company i have to recognize that presents a potential catalyst versus stock lower and what is feeling like a heavy market. it is not the cheapest

stock out there. the way i think one could trade it i was looking at a 1 x 2' spread. i was looking at september. that 310, 260, buying one -- against it. that/nets you are spending a little less than $10. this is an over $300 stock. we are talking about give or take 3% of the current stock price. if you take a look you will notice that 260 is considerably lower than the current stock price that also happens to be very close to where the stock bottomed out recently. on tuesday relatively close exploration, because the catalyst i see on the immediate horizon is the earnings, which they will be reporting on 1 september expect okay. that all makes sense. carter, what did the lulu charts tell you?>> it is struggling. let us say it that way. that is get right to it. the all data chart, a well defined trim line. you will see it here. we are just now flirting with breaking trend. considering this, lulu was $2.17

on the financial crisis, an incredible ride to 400. more here and now, this next chart, that is just over the past 15 years. that is a pretty major head and shoulders top. the here and now chart, the final chart, we are in the apex. meaning a standoff between bears and bulls. we can break one way or the other. i am sure any people think it will break up. my thinking is that it breaks down >> tim, what is your take on lulu lemon? is there anything interesting here for you be at the evaluation or the charts or a catalyst ahead of earnings >> well, i would address, mike pointed out is it a gap multiple or a nike multiple? he was saying that same. is a nike multiple. they are growing faster than nike. if you look at the quarter we are expecting somewhere around 25% growth. some gross margin hit. again, a company like nike

that has dtc, roughly 55% of the revenue stream comes from stores. 45% from e-commerce. e-commerce trend is strong. it is a company that north of 30 times on a multiple this is where it is trading for the last couple of years. in the environment we are talking about oversized by a day like today. the question is, how should this multiple contract and what premium of the s&p are you willing to pay? to me mid-20s on lulu is where you want to be looking. $11 a share in 2023. if you take that to 30 times, we could do that math, $3.10 a share. about 25. maybe around $2.50. >> next up, one group of stocks catching temperatures i in the middle of today's selloff. the names he is watching more options action coming up right after this

carvana's had a lot of firsts. 100 percent online car buying, car vending machines, and now putting you in control of your financing. at carvana, get personalized terms, browse for cars that fit your budget, then customize your downpayment and monthly payment. and these aren't made up numbers, it's what you'll really pay, right down to the penny. wheather you're shopping or just looking, it only takes a few seconds and it won't affect your credit score. finally, a totally different way to finance your ride only from carvana. when traders tell us how to make thinkorswim® even better,

we listen. like jack. he wanted a streamlined version he could access anywhere, no download necessary. and kim. she wanted to execute a pre-set trade strategy in seconds. so we gave 'em thinkorswim® web. because platforms this innovative aren't just made for traders -they're made by them. thinkorswim® by td ameritrade welcome back to options action. we are minutes away from a cnbc special. tonight at 6:00 p.m. done to is hosting with steve liesman. a major selloff today after terrell powell's remarks. what is on tap for tonight? it has to be a big show. >> is going to be huge. the reason why is on that cnb

special, as referred, the fed factor, we are going to break down the nine minute speech that sent the dow lower by 1000 points. fed chair powell packing quite a punch in those nine minutes, telling the markets that fighting inflation is the number one priority even if, and this is a key part, even if it hurts the economy. we are looking at every angle we possibly can with the limited amount of time that we have. banks, technology, the consumer asking the question that you want the answer to is their opportunity amid this selloff and is the bottom near or has it already been behind us? that is all coming up at the top of the hour. of course, we will do that show. i am sure the news and shepard smith is going to tackle it as well. we have a lot planned for the next couple of hours. >> thank you so much. we will be sure to be tuned in. and now a check on how stocks ended the day. the three indices deep in the red after fed chair powell

warned up some pain ahead as the central bank continues to fight inflation. him, you are pointing out more areas of the market that can be more sensitive right now. what he looking at, specifically? well, yeah. first of all, the defensive parts that are healthcare and energy, i think, are obvious. but the high multiple tech stocks that have been under a lot of pressure for a year and a half and caught in a response, pending or which ones you are looking at. whether you are talking about zoom or blast or the things in the a are cate-cate etf. to me, high multiple tech companies, especially the companies that are not making money are the ones that not only are under pressure in terms of their core business. i look at roku and the business they are exposed to. we heard from zoom. we heard some of the disappointing numbers. of all of these companies, these are the companies that in the environment where we are pricing assets differently and putting a different discount rates, a higher discount rate, these companies are worthless implicitly, if not explicitly but the high multiple tech if

you have a screen on your desk, which i do, these names were done almost 2 times the market today. i think they will continue to be under some pressure. they have had a great bounce expect mike, what is your take? >> the critical thing to think about here, tim is bringing up rates. are two issues to think about. one is how you discount future cash flow and the other is the cost of capital. if you are dealing with growths company is not seeing profits, not seeing positive cash flow now what does that mean? they need capital. they are borrowing it. if those costs go up that is a bad recipe. combine that with declining economic growth and factors like this and this is, basically, a slew of headwind for these names. it is the reason they are under such pressure. >> carter, your thoughts?>> one of those things being adored and loved, and this was such an adored area of the market, they also have the most suffering on the way down. the feeling they have had and the hounds they have attempted to mount is feeble.

the bounce is key. it is just not in line with other things they are high data. this is the last place you want i.d. in the event of general market. >> is there one name you are looking at more carefully here today after we heard from the chairman >> well, i guess, if we are talking about, the long side, from the mega tech world, the companies that are at times painted with a high-tech multiple brush. google, for example, to me, is the best value in tech, whether it is the peg ratio, which is price- to-earnings of one or less than one, and earnings multiple probably 17 or 18 times, so in line with the marketing growth north of 20% days like today are when a vespers need to be making a list. is a scary time. companies that are predictable, companies are giving you the free cash flow a lulu gives,

these are the ones i get excited about on a day like today. >> stick around. you will get the final call coming up next. we will be right back.

thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

it is now time for the final copper carter, let us start with you. >> interest rates -- sentiment to what is going on. i do not like -- i am a seller. >> him >> markets are a function of sentiment and positioning as well as fundamentals. i want to point out, we have never -- cash levels were hedge funds are over 6%, which is very high. sentiments are often. member that. i think there is a lot of bad price in this market as well. >> mike? take us home. >> we could certainly get a

riff. i expect we will probably see some. if you are making your respects do some with leaning sort. >> good advice for investors that does it for us on option action. will be big back next friday at 5:30 eastern. a cnb special, the fed factor starts right now - [narrator] the following is a paid presentation matt. one of the fastest growing sleep companies in the world. what's captured these people's attention. - whoa! - oh my god! - wow! - that's it. - wow! i'm impressed. - whoa! never would've thought. - never expected that. - it did, it feels like it's a brand new mattress. - yeah. - [narrator] it's not a new mattress that creating this reaction, they're lying on the same old mattress they've had for years. it's time for you to discover the premium mattress topper by dormeo. we believe,