baked the cake for a recession very soon. obviously, as you get further into a cycle, you're going get to a recession at some point but i agree with you at some point the market says we got it we heard you but it doesn't matter as much as how the economic numbers come out. >> that's mike santoli with his last word. i look forward to being with you again. "fast money" begins right now. right now on "fast," offtarget shares of the big box retailer crumble after an earnings miss on a weak holiday forecast target's troubles a sharp contrast to walmart's better than expected results. who has the true read? is a major housing correction unavoidable the details from the new report and the potential ripple effects on the economy, straight ahead tracking two earnings movers higher despite a miss on profits. cisco charging higher on better chan expected results. i'm melissa lee. this is "fast money. we're live in the heart of times

square on the desk, karen finerman, julie diehl, guy adami we start with another plunge for target the retailer stock falling more than 13% after its latest warning. that was its fourth biggest drop on record and its second double-digit plunge this year. target profits collapsed by 52% in the third quarter with a spike in shoplifting contributing to the losses the results and performance a complete 180 from what we saw from walmart yesterday, whose stock rose for a second day after its better than expected report yesterday is this a target specific problem or is this a real read on the consumer as we head into the holidays the backdrop of course also that the markets traded lower today on the back of this. karen, what do you think >> i think, well, a lot of those things are true. it might be both i thought this was a bad call. i really didn't like -- i didn't like how uncertain they were about their business i understand it's really hard these times to know. we talked, you and i talked before the show they seem pretty optimistic later in the summer

about how october would be and yet on the call they talked about october, but mid month something sort of went wrong, and they see that continuing in november i know that walmart talked cautiously as well but this seemed different. also, this $400 million shrink charge, this shift, i'm sure it's a real problem. but that is a very big number. and obviously, what that does to your margins when you have no revenue, that's bad. but they seem to have the problem worse than others. i really -- the retail data out today was good >> yeah. >> so i was very disappointed with this. and i looked at some other things we looked at tj maxx, which also has a home goods part that part didn't do well so i understand target, which has -- that's a good margin business for them. that didn't do well. and they don't have the groceries like walmart does. i was very disappointed. and then one more thing. this 2 to $3 million cost cut cost save, why now if it's so glaring and so

obvious, right, where was it all along? that sort of made me think all right, don't look at this. look at our cost cut >> and the wording around the cost cut is very interesting as much as 2$2 to $3 million. >> billion. >> billion, excuse me, short of job cuts so they're not going to lay anybody off to achieve this cost savings, but they're willing to do all these other things. so maybe the problem is not as bad? the problem seems bad if you're using phrases like meaningfully softened in the last two weeks of the month >> yeah, absolutely. the revenue trends progress through the quarter and just got worse and worse and worse. i feel like this concept of oh my god, part of what we're having trouble with is shrink and theft. that feels a little like the dog it a my homework what really this is we are not managing our inventory properly. we have too much of it it's the wrong kind of inventory. and for target, the critical component of their shopper is they need to come in there and buy pillows and cushions and all this stuff that they absolutely do not need, because the groceries are not enough to really drive that business the

way that it will for a walmart but if we're getting to a softer consumer who is getting constrained by higher prices from inflation, they're not buying no cushions they're not. >> you don't need that you sit on the hard floor. you sit on the old cushions you've got like guy does you've got cushions from 1970, guy. i want to turn to the question we asked what is the true read on the consumer we saw the markets soft today. and granted, we had a rally yesterday. target comes out and says all these things that the consumer behavior change in the face of rising rates, inflation, that gets one worried, i would think. >> the answer is they're both a true read on the consumer. and what's happening is people are going -- they're moving towards walmart for a myriad of reasons, not the least of which groceries. and target's product suggests people don't want what they're selling. they'll rip stuff off, but they're not buying it at the cashier, which is important. to this quarter, this is a

really bad jump communicating what they should have known weeks ago. they missed. $1.54 was eps, which was 26 cents lower than the low end of the street they missed by 50 cents or so, which is catastrophic. inventory still i think we're 17s were inventory build year-over-year which is still really bad there is nothing to like about this and gross operating margins were half of what they were this same quarter a year ago so they're operating poorly. now in terms of brian crennel, he has been there for eight years. he has done a great job on the margins. but the last couple of disasters are on target, in my opinion and i'll tell you something, because as you know, my heritage, i'm have italian, half sicilian $400 million for 10% of that, i could hire a swath of people around the country and nobody would rip off anything in a target store just saying. >> they just have to station you by the shelves, guy. nobody will rip anything off from a target store. dan, what is your take is this a target specific problem or do we extrapolate

this and say you know what walmart is doing great but really, there is a fundamental problem with the consumer, and they are changing their behavior >> well, i think that walmart and target have been telling us that all year long, if you think about it the divergence in the way they're managing inventories is probably a company-specific or a management-specific thing. but if i look at what investors are saying about this today, mel, i look at macy's. i look at best buy i look at dick's, all down about 8% here today. so if we're talking about some of these more discretionary sort of items away from food and gas and staples, that sort of stuff, i'd say that this is kind of like the death rattle for the u.s. consumer after a very uncertain few years here and again, we were talking about it with walmart. i was a bit surprised at those results the other day. but again, i think it's more to the staples. they've been telling us that a certain part of the consumer has been trading down, and that's

been going on for months so to me, i would say walmart is probably a bit of an outlier and when you think about the heavy discounting and the inventory issues a lot of retailers have into this holiday season, i don't think it gets better early next year so to me, this is not a space that i want to be buying the dip. >> the silver lining, though, to this all, to this notion that the consumer slowing down is feeling the pain, i'm not about a optimist by nature but the silver lining is what the fed is doing is working, right? so maybe this gives the fed a little bit of a cushion to back off. maybe this cements the idea that 50 basis points is going to be it for a while perhaps and then there is an opportunity to pause, julie. maybe this is really optimistic. >> i mean, yes, but no, right? because if you're saying i'm going to cut 2 to $3 billion, which i don't know where, but i'm not going fire anyone, that's not what the fed wants to hear what they want to hear is we're going have to cut employment, especially at this level where we're seeing the most wage inflation. and that's what the fed is the most concerned about is the

stickiness of inflation, particularly on the wage side. and the strength of employment we want to continue to actually see employment soften or we don't have a prayer of controlling inflation. so i actually -- you know, it's great to say that we're going get deflation from these discounted cushions and clothing, but it's really not going to be enough to offset higher housing and what's happening in wages >> one other interesting data point today, though, was lowes you would have thought given what target said that same consumer wouldn't be at lowes, yet lowes had a great quarter. talking about the refurbishing business is still very good. they did a good job managing their business it seems a little more idiosyncratic to me in a difficult backdrop but some seem to be managing it okay >> home depot. >> maybe it's that kind of good. consumers are willing to go and buy paint and things like that that will actually add value to the house. when you're talking about a lamp

that's the shape of a teddy bear or a cushion, you know, with embroidery on it, that's not going to add lasting value so maybe the consumer is a little bit more discerning in terms of what they spend and how they spend it. >> that's true that's true. >> guy is this actually optimistic? i know what you're going to say, but i'm going to ask you any way. >> through the lens that you just put out there, in other words, is this going to take the fed off the front burner in terms of what we're all watching yeah, potentially. i think all these data points suggest that what you're saying is it is working so if the only reason to be bullish for equities is the fed is going to somehow slow things down, as dan would say, have at it the problem is they can slow down and the backdrop is such that things are still slowing down, and multiples should still slow down, and people should pay less for earnings, which by the way are also slowing down. so although you can get the fed off our back, which is a great

thing. i'm sure everybody will be excited about that, there is no denying there is certain things going on we didn't event mention in the first minutes of the show. but now extended out to extraordinarily unhealthy areas. say it all the time. i'm not smart enough nor hume moreless enough to be an economist, but i will tell you 65 or so basis points inverted is no bueno, sister. >> sometimes you are cloudy. and the notion, dan, that we all had that if the ten-year yield went down that could be runway for tech stocks to go higher that's maybe dashed a little bit. we're at 69 at this point and what's happened? nothing. >> yeah, that's to me, mel, the biggest surprise today about the price action in the markets, to see that the ten-year yield finally give it up and after thursday's 30 basis-point drop after that cpi print, which i think we would all agree was pretty eye-popping there, the continuation of it lower and then the fact that

some of these higher valuation names that don't have earnings that are still expensive, even after being down 50, 60% or so couldn't catch a bid on this price action i know we're going talk a little bit about nvidia's earnings. but this is going to be a really important one to see how this stock trades because i think a lot of tech investors were waiting to get a sense of what the guidance looks like and how the stock at least is going to trade relative to the expectations a massive rally off the lows again, i look at all these names that started getting killed in 2021 before the fed even indicated that they were raising rates. the thought they were going have to battle inflation. they just started getting murdered in the perception of a higher rate environment, and they haven't really stopped until very recently. >> all right our next guest sees a year-earned rally coming, but she is staying defensive let's bring in kristen bitterly. kristen, great to have you with us calling for a year-end rally

it's a short time frame at this point, getting shorter and shorter. it's amazing how the calendar go by so quickly. the next month and a half. you're really being tactical about this beyond that rally, you actually see 3900 for the s&p 500 >> yeah. so i think to be clear, we see a potential for a support to this rally, depending on what the data tells us over the next couple of weeks which are going to be pretty critical catalysts. that said, what happens over the next couple of weeks does not change our base pace for a recession at the beginning of next year. we believe that's going to start in q1 of 2023. and we actually see an earnings contraction of upwards of 10% in u.s. equities. that is clearly not priced in at these levels that is something when you look at analysts' consensus, we're anticipating about 5% growth. so i think the overarching thesis is what could happen short-term versus what's going to happen in 2023. you can't fight the fed. the idea that the 7.7% on cpi and getting down to their 2%

target, and at a 50 basis point hike is somehow dovish, we don't buy that we believe we're going continue tee see tightening financial conditions and still see deterioration in employment. the fed's not going change course. >> it's karen. thanks for being on. so what's going toe cause the rally, then, into december i thought there was tax law selling for people who want to harvest losses and that could weigh on the market for a while. >> really it's right around where the s&p 500. again, it's sort of support argument for what we've seen i think what you could see is ultimately light positioning, some market resilience sentiment. if we do get -- now the december 13th date i think is really critical if we do get a reduction in cpi, all of the sudden you can see the market reacting very positively to that and carrying through the year end on the flip side, given this light positioning, if cpi actually comes in higher, you're going see the opposite so if there is any type of

retracement of some of the inflationary pressures which we could see in airfares, in terms of energy pricesing in that sector, that would do the opposite going into year end >> so kristen, what is defensive in your view you really -- fixed income, is that it? >> we did. we did so our portfolios right now, they're actually defensive and leaning into quality of fixed income as well as equities we are overweight fixed income but within fixed income, we are overweight investment grade. we're overweight u.s. government, munies, and to a certain extent we have preferred exposure as well, just given the high yields there. on the equity side, we're looking at all of those sectors that basically can grow earnings throughout a recession and so health care pharmaceuticals, consumer staples, when you look at their growth rates during the past four recessions, they've been able to grow earnings from 5% to 8% given our rate for 2023 is a

recessionary environment, that's where we're poxed. >> what is the risk/reward for being long into the cpi print? because it sounds like you think if cpi is hotter, we're going see just a crush of a sell-off thinking is a great question i think one of the things we've been doing in terms of this rally is actually using it as a way to position more defensively, rebalance portfolios another great strategy just looking, depending on whether you're already invested or whether you're sitting in cash so if you're already invested, using this rally to actually edge there is the sell the rips, buy the dips on this rally, put on some hedges going into year end so that way you still have some exposure, but you're able to protect against a 10, 15% decline. if you're someone who is sitting in cash, another strategy, and we've seen a lot of volumes going into this over the past couple of weeks, and some of that activity actually drove the market higher last week is just simply buying some upside. so buying some upside call, calls spreads, in terms of being positioned in the market but obviously, mitigating some

of that downside risk. >> kristen, thanks kristen bitterly. >> thank you. >> of citi dan, you're all about selling the rips here. >> listen, i thought that was a really great discussion by kristen, because, again, it plays out a couple of different scenarios that could happen. the likelihood that we come in and we have hotter data, i mean none of us knows even on that cpi print last week, you know, it was explained away it wasn't even that soft, right? but the market absolutely ripped so to me, i think the market is setting up for a rally, a continuation of the rally. guy has been saying 4,000, maybe overshoot to 4100. that's the climbing 200 day average. that's been in place since the all-time highs of the first week of the year. i think if you get there on anticipation of some sort of softer fed action, i think you sell them and sell them again because i just don't think that with tighter financial conditions, even if the fed is not going to be doing this 75

basis points that they've been doing for the last four meetings, we're still going to have tighter financial conditions and still s&p earnings are not low enough for 2023 >> i liked her strategy of selling upside calls if you're a longer investor like i am, you sort of want toe hang on to. sold some jpmorgan, sold some calls to take money off the table. >> i'm not nearly sophisticated enough to work in hedges but i think it's impossible to try to time the market so for us as long-term investors, investing in the quality that she is talking about, what we're really looking at is durable earnings businesses if i think of a rollins, literally every year, 5%, 10% top line, eps growth from share repurchase, good capital allocation, i think those are the types of businesses you want to own when it's an uncertain environment. up next, we've got some after-hours trading on the way shares of nvidia we'll bring you the results next plus, don't think big. why some small cap names could

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nvidia shares are higher, profit margins well below its forecast. kristina partsinevelos has been listening into the call. she has the details. kristina >> hi, mel management seems like they see a light at the end of the tunnel we believe channel inventories are on track to approach normal levels as we approach q4 the bar was pretty low nvidia managed to beat that for revenue, and that's helping the stock a little bit the guide for q4 was flat at $6 billion. not down, flat and another positive sign, it expects the adjusted gross margins to be 66%, well above estimates and a previous quarter. which segments are going to keep growing? data center revenue was up 31% year-over-year it sounds great. but only up 1% on the quarter. some of that growth was impacted by softness in china over the new u.s. export rules for ai chips. keep in mind those chips that now nvidia is going to sell from china, they have a lower selling price. so that's going to hit margins i want to point out too, auto segment grew 14% quarter over quarter. they're on a call right i know,

and they believe that's going to continue to climb. gaming beat estimates, but was still down a whopping 51% year-over-year, reflecting lower prices, especially for laptops the cfo pointing out that secondhand market, or the secondhand market hurt sales since minors got rid of their cpos after the ethereum transition >> kristina, thanks. keep us posted kristina partsinevelos guy, kind of a messy quarter here. >> it is a messy quarter they did $2.5 billion. this year they did 700 million that's a decline in terms of eps, i mean, you're talking about pretty much in half from the same quarter of last year. it's not good. talking about a stock, by the way, which in a month has rallied over 50, 5-0% and is still probably trading at 13.5 times revenue and probably 32 times next year's numbers. it's an expensive stock.

great company, expensive stock i'm surprised we're up in the after hours. i would have thought with this gross margins and operating margins, we would be lower and i think we should be lower at some point tomorrow there is a lot of call to go, as kristina points out. just beginning what would you make of this here would you want to be long in nvidia given what you think is going to happen with the markets? >> no. i mean, listen guy just said, great company, great management, great products they have tremendous headwinds just when you thought some of the issues that they had with supply chains and some of their customers, then you have that export band drop down. they think they have a workaround on a different chip here i did say this about the gross margins that is a pretty staggering miss. when you look at q2, they came in at 46% gross margins. q 3, the one just reported, 56 this company was averaging 66% gross margins in 2021 and all of fiscal year 2022 so the idea that they're guiding the 66% in q4, i mean, a lot of great stuff has to happen here

so i'm a bit skeptical that this q4 number is achievable. and again, they just beat -- it wasn't a big beat by any means, but they guided down last quarter. remember, twice. twice last summer they guided down, or this past summer. to me i think visibility is kind of weak. i am also surprised the stock is up in the after market. >> i agree i think the gross margin is the place where i'm paying the most attention to because i think it's going to be an ongoing theme. we're going see revenue doing a little bit better because inflation is helping and then we're going to see gross margins and operating margins be really under pressure because of higher cost and mix i think that's going to be a consistent in semiconductors, but i think we're going hear that over and over again as earnings progresses. and i think the thing to keep in mind is so what we have is we have earnings contracting, even with a little bit of top line. we have multiples contracting. it's hard to really get enthusiastic about opportunities longer term. yes, the comps will get easier in 2023. but we're kind of a long way off of that. yeah, i agree.

i'm not really keen at this level. >> there is a lot more "fast money" to come here is what is coming up next >> wrestle with some muscle. could small caps be your port in the storm? why one of our traders says it pays to be choosy in this market environment. plus, housing market mayhem. could we be in for a repeat of the great financial crisis the stark warning from the dallas fed, ahead. you're watching "fast money," live from the nasdaq market site in times square. we're back rightft ts. aerhi

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welcome back to "fast money. major averages all closing in the red today with the russell 2000 index leading the losses down nearly 2% the small cap index outpacing

the s&p 500, though, so far this quarter, though losing a bit of steam since the beginning of the month. one of our traders thinks there are some big advantage to small cap names that would be julie. what do you see here >> you know, i think i really am grateful to be a small and mid cap investor i am avoiding a lot of the fx headwinds. we talk about fx as if it's this artificial thing that changes numbers. but it impacts your business long-term. you're not deriving as much cash flow as you would. that's one two, a lot of these small and mid cap businesses, they have control of their supply chains they're usually less complex they're usually less followed, which is great for investors is there is just a lot of reasons. and i think generally speaking, i would prefer to be domestically focused i think the u.s. is the least bad neighborhood to be investing in right now the thing is i wouldn't say you should be broadly buying the russell 2000 basket, because i think there is a lot of risk within small businesses too. they don't typically have as

large as a cash cushion. so you have to be very choosy. you have to have pristine balance sheets you have to have businesses that have earnings, just the basics but i think generally speaking, they're pretty well-positioned longer term. >> so let me ask you when you look at metrics to decide whether you like something, do you look at return on invested cash is that an important metric for you? >> absolutely. i think cash is pretty critical for these smaller businesses they really live and die off of their cash they typically -- it's harder for them if they're going to go to the debt markets. so it's really, really critical to be able to look at the cash returns on their business. we like businesses that aren't very capital intensive to begin with. >> i actually meant return on invested capital when i says roic -- or i didn't say it >> both are really important it's really wonderful when you have a business where it is the master of its own destiny because it's generating so much cash it's wonderful when they can be using that to buy back shares or selectively make acquisitions. and i think in the health care space in particular, those tend

to be less capital intensive businesses. >> right guy, what do you make of the recent outperformance of small caps >> i know julie is not talking about if iwn, you have a little double bottom. traded down in june, traded back down in september. held, has bounced, not a great day today. but i think that augurs particularly well. i always thought the small caps were the sort of the leading indicator for things today wasn't a particularly great day. if they're going to be macro headwinds, a lot of these small caps arenot going to be immune to that. i think she is smart to point out the value in small caps. but i also would be quick to point out if the iwm can't close above 190, i think with especially probably take out that 162 1/2 level and have an entirely different conversation. all right. coming up, a bubble of trouble the big warning from the dallas fed on where the housing market could be heading we'll go inside that report next plus, we're all over cisco in the after hours the details from the quarter, and where the stock is hdi, eang when "fast money" returns.

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welcome back to "fast money. a bleak new analysis out from the dallas federal reserve central bank officials warning a 20% drop in the housing market in terms of prices is in the

cards. and if that happens, that could put a real dent and real personal consumption expenditure. so is a major housing correction unavoidable at this point? let's talk chief investment officer with bleakly financial group. we use the term "bleak" on purpose since you're from bleakly. you agree this is a possibility. do you see that 15 to 20% number that they sort of threw out there as a scenario a likely one? >> well, in certain markets for sure, particularly the hot ones. and just to give perspective, over the last two years, home prices are up 40%. if you look at the time frame between 2013 and 2022, home prices went up mother than the 1998 through the 2007 housing bubble so it's an extraordinary rise, and now you have 7% mortgage rate which are 15-year highs

so it has all the ingredients to see annuitiable fall in home prices but again, specifically in the hottest markets like phoenix or miami. now on the other side, there is a dearth of inventory. 92% of people that have mortgages have a mortgage rate below 5% many of them are not going to be anxious to get out of those mortgages and move so the one thing that can mitigate a sharp decline is that dearth of inventory of existing homes. however, new homes, those inventories are building rapidly. >> so richard bernstein advisers tweeted out something very interesting to me, peter, today. and that was remember what happened to texas real estate during the energy bust in the 1980s, right we saw a real downturn there so what is happening in silicon valley and those sort of formerly hot housing markets we're seeing the layoffs begin we're seeing a contraction in these sorts of businesses, these growthy businesses, even in the more established businesses like

a meta, we're seeing job cuts. so what happens in those markets, particularly as mortgage rates are above 7%? i mean, it almost seems like people may leave their homes who are the buyers of a home in an area where the jobs are not few and far between, but they're not really hiring at this point and your mortgage rate is 7% >> right it's going to take to your point much lower prices. in the aggregate, housing all in is about 15 to 18% of the u.s. economy. we saw what we heard from walmart and target, one of the areas of weakness where things related to the home. and your point about that particular market being weak, yeah, we're going see pockets like that. it was only a couple of years ago where it cost you a million and a half dollars to get a 500-square-foot home in northern california and that certainly is going to change but it's also going to change for that entire economy as well, making it a more attractive place to bring in more jobs.

there is adjustments to be had here for sure. >> in the dallas fed's analysis, peter, they specifically outline the scenario of a drop in housing prices between 15 and 20%, and if we saw that drop, it could shave off between a half a percent to 0.7% in real person consumption expenditures that doesn't sound like a lot, but can you put that into perspective for us >> well, the wealth effect with housing is much greater than it is for stocks. consider 65% of households own a home the ambulance rent whereas in the stock market, the top 10% own north of 85% of stocks so that 5 to 0.7 of 70% of the economy is on a dollar basis a very noteworthy number and that's just looking at in isolation. imagine the ripple effects housing is almost 20% of the u.s. economy, and almost 20% of

the u.s. economy is in a recession right now. that will continue into next year >> all right peter, thank you it's always good to see you. peter boockvar of bleakley >> nice to see you we had home depot yesterday. we had lowe's today. they were still relatively good relative to target what happens now if we think this is the ripple effect that is sort of being unleashed in the economy right now, guy, what is the writing on the wall in your view? >> yeah, who is impervious to that look, home depot at 18.5 times is cheap to itself it still trades mother expensive than the broader market, but it's relatively -- i think it's fair in this environment and they should went to -- listen, either side of the equation, home depot has proven they're a great operator but this is what the federal reserve wants. as a matter of fact, back a couple of meetings ago, before jerome powell left the stage, he threw in by the way, millennials, i'm paraphrasing, think twice about buying a home.

what's happening right before our very eyes is everything they want to happen and to think there are going to be no knock-off effects or you'll be able to skate through unscathed on the back of that is foolish. i think there is pain to come in the housing market and i think we're seeing it in the form of target's earnings. >> i agree particularly on the concept of millennials, the housing is really where most americans pick up their own wealth. it's just forced saving. and everyone assumes that prices are going to continue to go up but when we have reached the levels of unaffordability that are at records, it doesn't make any sense to really think that there is going to be an improvement in housing what's interesting is in the last housing downturn, the majority of people had variable rate mortgages and this time everyone did a great job getting 3% mortgages for 30 years and they're not going to move. really, the only thing that's going to move is death, divorce and excesses of debt i think it's going to be slow for it to really change as

opposed to other international markets like the uk where you have so much more variable rate that's going to kick people out because of unaffordability coming up, more after hours action, this time in shares of cisco that shtock is on the mov. how retailers are responding to the ftx collapse jason frank, aka the stock guy will join us to explain. don't go anywhere. back right after this. and buying your starter home. or whatever this is. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. we believe that your investments should work harder for the future you imagine. and that's where our strategic investing approach can help. t. rowe price. invest with confidence.

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welcome back to "fast money. we've got an earnings alert on bath and bodywork. shares are soaring by almost 32% after the company beat q 3 earnings expectations. also raised its forecast for the full year. guess they're not buying cushions, but they're buying bath bombs and mango lotion, guy. we're pondering the move that we saw in bath & bodyworks, up 21%. we immediately thought there was a high short interest, but it's only 7% or so. >> no, i mean, listen. obviously surprised. i haven't looked at it i apologize. but what i'll say is yeah, people are buying -- the pillows apparently but if you look, peter boockvar bought some of those pillows and the facial scrubs they're leaving up to people like me

i can't speak intelligently about bed, bath & bodyworks. maybe karen has more to say. >> no, nobody owns this one. we thought we would bring it to your attention because it's up 21%. another earnings alert on cisco. shares jumping after hours on the top and bottom lines the company issuing strong guidance for next year frank holland has been listening into the call, is here with the details. frank? >> hey there, melissa. a lot of talk about supply chain on the call. but cisco shares are moving higher after the beat on revenue on eps quarter was solid for guidance, the top range above estimates. the margin the only question ceo chuck robins says the company has redesigned hundreds of products from covid lockdowns in china that margin nice could be seen as a sign of supply chain issues, but robins said a short time ago those are easing. >> over the last few quarter, you've heard me talk about the actions we have taken in supply

constraints. these actions are paying off and they're contributing to our results. we now have greater visibility in the ramp of our customer products which gives us greater confidence in our fiscal 2023 outlook. >> robbins also detailing backlog is reaching a record of $8 billion by the end of the year a signal of strong demand that's moving other component makers higher and then later on coming up on "mad money" right after "fast money," ceo chuck robbins will be there with jim cramer talking about the quarter and much more. back to you over to you. >> thank you dan nathan, report backlog wow. >> yeah. well, mel, not just that their annual recurring revenue increased to more than $23 billion. that's nearly half of their total revenue, and that's growing at 12% year-over-year. this is stock that trades 12 1/2 times earnings so well below market multiple. well below many of its peers it only has expected mid single digits earnings in sales growth. the margin miss is nothing like

what we were talking about with nvidia it was a bit of a rounding error. this stock was trading at 20-year highs coming into 2022, down about 30% it did have a nice rally from the high 30s to the mid-40s into the print. but this is like a good quarter, a good valuation, good balance sheet, good dividend yield i think chuck robbins is probably executing well in a difficult environment. >> bath & bodyworks may not be one for you, guy, but certainly cisco is i know you got a lot the say on this one only 13 even though it's trading at 20-year highs. >> slow and steady wins the race 6, 7% eps growth maybe at the top end 6% revenue growth. trading at a reasonable valuation. with the recurring revenue stream, which in this environment i think is worth its weight in gold so the fact that cisco sold off i think from 61 to dan's point in december of last year to levels we're seeing now, thing is about as defensive as you can be in an industry where a lot of

highfliers are getting beaten up >> yep coming up, the twitch take on ftx financial streamer, the stock guy jason frank will join us next "fast money" is back in two.

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welcome back to "fast money. mark your calendars for a can't miss interview binance ceo joins "squawk box" tomorrow to talk about the ftx fallout and the future of the crypt stow space that is a must-see interview and speaking of the latest fallout, jimeny blockfi and genesis announcing new restrictions on everything from loan originations to fund withdrawals as the ftx contagion spreads. and sam bankman freed being called to testify about the implosion of his crypto exchange joining us to talk more about the fallout is twitch streamer jason the stock guy. he has a huge retailer audience on his twitch channel. so jason, tell us how they have been responding. in the past, people have seen pullbacks as buying opportunities. i imagine it's a little bit different this time. >> as far as the crypto space right now, you've got basically

it's broken into four factions at this point. you have your people that were anti-crypto the whole time are saying hey, see, wee told you so you've got your side that is the big fans of personal owning and having that cold storage telling you hey, listen, we told you own your assets. the other side is the retail traders that are on these exchanges that don't know what they're doing. we saw this massive influx of retail trader others the last two years as equities as well as crypto they don't know what they're doing. they're all waiting for some signal and then you have everybody else who is meming the heck out of this entire thing right now, which i think is the vast majority i feel like everyone is kind of waiting on what's next right now. and everyone is kind of playing the side of well, i told you so, i told you so and we have to wait the see what happens from the fallout. >> it seemed like there was a tremendous overlap, jason. this is just my perspective on things, having followed sort of a lot of the meme stocks and who is in the medium stocks there is a lot of overlap between those sorts of investors who got into

trading, trading those stocks first, and the influx in money into crypto. and so on two fronts, they have been burned. what is the temperature? you've been talking to a lot of these investors, hundreds of thousands of them by this point. how are they feeling about investing in general do they feel burned? do they feel like the game is rigged do they feel like they want to keep investing >> i mean, as far as -- we have to break it down into two sectors. there is trading and there is investing. a lot of these guys that are new coming into this really don't understand the difference. a lot of them see these runs from two years ago or the crypto explosions and they say oh, that's me. i want to get in on the next one. they get or get burned or catch a falling life and they're out or they keep going until they blow up their account. then you the others who get into it, and they get burned in the beginning, and they say okay, let me take a step back, and let me understand how the market works. and i feel like there is two different sectors there. and right now, i would say the retail trader has been all but

wiped out for the most part compared to where we were a year ago. but the retail investor i think is just getting started. >> what is the retail investor doing at this point in your view and what are you telling them to do >> i mean, i'm a buy the dip kind of guy. we know the macro environment right now is very, very choppy it's very, very volatile and we know that we've got a lot going on the feds continuing to raise rates. they're saying they're going raise it even if we hit a recession. we've got what's going on with china. we've got russia there is a lot going on but over the course of time, i think that as we get more people interested into the stock market, we're going see them so we've got some people that are day trading, some people that are short right now i'm going to be honest with you. i don't think a lot of firms and a lot of analysts are really understanding how much cash these guys are still sitting on. >> and you're saying basically buy steady eddie sort of stocks and sell premium against those positions? >> absolutely. i mean, i think two things

i know energy had a big run this year i know we're waiting for the fed to cut rates, and then we're probably going to see a rebound in growth and spec stocks, arc and the russells and what not. in the meantime, i keep hearing this phrase "the lost decade" thrown around. crypto is down oil is up. we don't know. eventually it's probably going to have to come down metals are no longer moving at the same time. commodities are all over the place, and the dollar is at recent highs equities are where it's at i think everyone is just waiting for when the fed actually shows where they're going to pivot, if they do and when they do but as far as what i'm telling them now, i'm saying you know, stick to your plan maybe be a little bit more often with smaller amounts on your dollar cost averaging. but i really think is going to be the year of the ditties even if we flat line or chop in the channel for a year or two until the terminal rate comes down, i think dividends -- i know defensive stocks are strong, but i think dividends are overlooked big strong stocks. even if they hold flat, you're

going to get that compounding dividend paid in that's where i'm at right now with me. >> all right jason, great the get your read on the retail trader/investor out there. appreciate it. >> absolutely. >> check out his twitch channel. it's important to keep in mind that, you know, investing in dividends, the stock itself can go down as the dividend goes higher, karen. so you have to look for the stocks that have great balance sheets, great growing businesses, et cetera, et cetera on top of that dividend. >> you could have owned at&t or verizon for a long time getting that dividend year in and year out and yet losing money i've got say i'm a little bit surprised that this is his focus, you know. that seems interesting to me like he is talking to this retail trader. think about a long-term. >> yeah. >> all right well, if you are retail trader out there, you might be wondering how you can get in on the action premium against your position to make money a little more safely. brian sullivan joins us for a little "options action" 101. brian? >> when you talk about owning

stocks, i think what jason is hitting on is large cap value stocks that's an area that we focus on in our fund. and i like finding those names the own right now as well. and if you want to take in some additional premium, selling a call on the upside is a right thing to do. and look, when the vicks is around 25 or higher, it's come off its highs. meaning that the stock market bounced off the lows a little bit. but premiums are elevated. that's what the fixed measure is premium of options now the s the time to look and start to sell. if i'm looking at something and i find a strike price, let's say about 10% or more to the upside, looking maybe at some technicals, 52-week highs or some support resistance levels above that 10% level, that's an area i can pick for a strike price to work with and then for stocks, i like looking about six months out if it's an index fund, s&p 500, maybe i'll only go three months out. stocks i like to get a couple of earnings in play here and go six months out let's say for example intel. that's a tech stock, but it's actually considered a large cap value. that's a stock i sell. i can sell a call to 37 1/2

strike or whatever collect some premium and that's a stock i'm probably going to keep in my portfolio and take some premium in >> thanks. "optionsctn":30 m. aio 5p. on friday up next, final trades. you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠.

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we're out of time. here are the desk's final strads thanks for watching. we'll see you back tomorrow at 5:00 don't go anywhere. "mad money" with jim cramer starts right now. >> my mission is simple to make you money. i'm here level the playing field for all investors. i promise to help you find it, mad money starts now. >> hey welcome to mad money. i'm just trying to help you make some money. my job is not just to entertain but to educate and teach you so call me. let me tell