blackout over the weekend, so we're not going to be hearing from officials the way we did. actively ahead of this week, the meeting. how all of this cons to play out. >> real tests of the luxury consumer coming with that apple news. perhaps watches, too. we'll see if they want to buy it. >> that does it for us here at overtime. >> fm"fast money" starts now. >> here's what's on tap tonight. losing its luster. luxury housing market sending shares of rh to the worst since the start of the pandemic. is this a single stock problem orca nary in the consumer coal mine? researchers blaming the phenomenon for recent misses but just how big of a bite is shrink taking out of bottom lines? laterer all talk may have been about apple's breakdown, but there's another group getting hit harder. what's dragging down

industrials? could they fall further? we'll ask the chart master. i'm melissa lee. here on the desk tonight -- we'll start off with the latest red flag for the luxury retail market. rh plunging after its ceo warden high mortgage weights and a weak housing market could weigh on its consumer. the stock sinking 15%, worst day since the start of the pandemic and falling into the red for the quarter. not the only luxury retailer under for the quarter. all down since the end of the third quarter. beyond housing, china's weakness also part of the story. if the high end consumer is starting show shines of cracking on the low end, too, how worried should investors be right now? you were worried before because you got out rh. >> i love the company, and i think they are ability to hold the line in terms of margins and pricing is something that's been a big part of the success and profile of the multiple. it's not an expensive stock and

it was not about what they reported today. they beat the street small. the outlook was cautious. this was a ceo that can get kind of emotional and sometimes really -- lay it out there in a way that's honest, maybe sometimes too honest. i think if you look at the consumer across the spectrum, we've talked about the different segments and we've almost seen it play out. to the extent this is another warning shot, we heard from nordstroms who would have a similar clientele and we're starting to hear from them about delinquencies. i think it's a case where as market players, we're looking at, is there really going to be strength in term os their pricing ability? is there really going to be the kind of demand? i still think there was an enormous pull forward in terms of where demand was for rh products. they're wonderful products, and i think they're always going to have a consumer to pay what the premium is for those products. i wouldn't overreact to today's

numbers. but we see ingredients and they're coming in from every piece of the demographic spectrum the the consumer. >> there are only so many large sofas one can have, julie, in your home. that is part of the rh problem. but management also talked about overconfidence in the pandemic price increases, which was interesting i thought because that gets to the notion that at some point you cannot raise prices even more, and with the consumer that's starting to count their pennies so to speak, they're really scrutinizing the prices. >> yeah, i think that's a recognition, and there's a certain amount of humility i appreciate when companies recognize they've pushed too hard on pricing. i think that's important. what is important, too, to take note is they're going to have to mark down their inventory they have, and their plans are to refresh their inventory more regularly. before they would refresh 15% to 20%, and now they want to refresh 80%. when you start to do that u your

designers who want to rely oun for a sofa they always use aren't sure you're going to have it, and you're creating risk for yourself. strategically over the long-term this could be difficult for the company to pull off. i'm concerned about that. makes sense. if you think about gary freedman, which is somebody that had a background in fashion. makes sense this is directionally where it could go, but it could introduce more difficulty for the business. >> yeah. guy, what's your take here? >> it's not restoration hardware necessarily i agree with tim, of course julie as well. in terms of the quarter it wasn't bad, and the full-year guidance was actually pretty good. two concerns i have -- margins seemingly are compressing, which is obviously not a good thing, and all their inventory seemed to be getting in line. the sales growth that should be supporting that is actually worse. so you still probably don't have equilibrium in terms of inventories.

we heard from the lower end, the way you started to show. the lower end told the story. now we're hearing from the high end. the consumer is probably to a difficult straight. you have everybody come on and say, the health of the u.s. conseemer, they're wont to spend. i get it. but we're in an environment where things are getting dicey with the rising interest rate environment. if you think interest rates are going higher as i do, i don't think it bodes specifically well for the american consumer. >> people typically tap their home equity, and at these rates they're not going to want to do that. think about dollar general. we saw a similar percentage move on the back of dollar general earnings as we are seeing on the high end, restoration hardware. >> yeah, i think you really hit the nail on the head in terms of the home equity and refinancing ability to tap equity and wealth. there's a saying that essentially the wealth for the consumer within the u.s. is at its highest level, and that's in

large part because of the last two or three years. with that said, ability to access that wealth is what's here. and then you have the second thing -- and i don't think this is the first time that we've seen signs, not withstanding the lower end consumer. the higher end consumer, which is also trading down and looking for ways to shop at walmart and target for, you know, discretionary and more core goods. what you're seeing here is that with a name like restoration, you have the option of whether or not you're going to turn over the purchases that you've made or whether you're trying to get an extra year or six months or nine months from set purchase. i think it's a bit of a two-prong situation. whether or not you actually have the money to make the purchase and whether or not this is really going to be cut down to the net -- cut down to the screws and make a determination of whether or not you can get a little bit more useful life off what is to me a bit more of a durable good. >> if i tune in right now, bonawyn, i would have thought

you were talk about app and whether or not consumers are going to buy the iphone 15. it's interesting we're getting this data point -- or discussing this data point today just days ahead of apple's launch. it's the same sort of thinking, isn't it, tim? are you going to upgrade your phone or wait longer because you can? >> i just bricked my phone a couple days ago and had to buy the 14 ahead of the 15. i needed a phone. this always seems to happen to me. if you think about the a.s.p.s, there's peril here i like that. one of the things we heard, although they have been able to hold the line on pricing they acknowledged they were overly aggressive in term of their product and quality designing but the pricing around their contemporary line, and they did this last quarter. i think they're going to have to give ground. that's what worried the market more than anything. the affluent consumer has a point, but there is a point where also what we've seen is them progress through goods to leisure, and that's been part of the progression going on in the

space. that's where rh and apple both fall on the wrong side. we had a big week around apple. china's an issue, but apple's issues are really more about where it sits in terms of discretionary. >> you really felt like the china story this week, julie, was the straw that broke the camel's back here. but it's all these other concerns, is a potential that maybe the high-end consumer will not be there to open their wallets for the 15 or 15 pro, that's the real concern here. >> yeah, i think it's -- we need to think about the high-end consumer even within segments itself. a lot of people would consider the high-end consumer for our age, that is more an aspirational purchase for their consumer. that's why you're seeing the weakness. thats the story of the trillion dollars in credit card debt we have. i think that's more -- on the

apple side, we know there's not going to be a revolution, but rather an evolution in term of how much better it is than the 14. it's hard to justify price increases for people who are starting to have a little bit of nervousness. it's not necessarily the ability to pay, because most people have a job and can, it's the confidence to start shelling out for big ticket items. >> you can catch a csn exclusive with rh ceo 6:00 p.m. eastern time on "mad money". he's always colorful. you won't want to miss that. retailers also grappling with another major problem, shrink. gabrielle has been analyzing the balance sheets to determine how much money they're losing. gabrielle, welcome. >> thank you. >> it's interesting because finally retailers are actually putting a number next to shrink where they haven't always before. what have you found? is it as big of a problem as they're making it out to be?

>> yeah, exactly. thanks, melissa. we have spent the last couple weeks pouring over security filings, listening to earnings calls. they've left a series of clues about how much it costs. we found it's in line with the industry standard. they've supposed to budget for 21%. lowe's reaches their lowest, almost $1 billion. yes, this is a big scary number, but it's just 1.3% of scales. you can see in the numbers, starting in fiscal 2017 you had half a percent. it hasn't been growing at the same rate it has their sales, but it's still within the standard, and if you want to turn to how that compares with other losses from other retailers, target is a great example of that. in fiscal 22 they lost about $750 million to shrink. we knew that number already. if you take a look at their 10k,

you see they lost $3.6 billion from liquidating freight cost, but mainly all of that liquidation. >> is that shrink, though? >> that's not shrink. >> that seems to me like loss of margin. sounds like a retailer that has had issues with inventory they all have. how can you fill this under shrink. >> the 3.6 is not filed under sl shrink. it's just a good comparison. they think a lot about shrink. if you look deeper in the balance sheet, that's not where profit drains are. they're losing it from liquidation. saw this at dick's. they never talk about shrink in 20 years. they finally brought it up, put it in their press release -- our margins are under pressure from shrink. they lost $27 million in shrink, but lost $54 million from liqu liquidating outdoor inventory. only $27 million. >> why do you think retailers are doing this?

look at this problem over here so you don't look at the other ones over there? >> we've got two classes of retailers. lowe's, their shrink increased. it's lower than industry standard, but it's a big deal. for some of the other retailers, they're feeling pressure on so many part os their business. you've got a consumer slowdown. you've got higher spending on lower margin products that ship tours consumables. people aren't shelling out for clothes and apparel. over at macy's that's a problem. they're trying to talk about the things that sounds look it's out of their control to distract from sol of the things that are within their control. >> gabrielle, thanks so much for coming by. julie, your take on this? >> i remember a million years ago when i was a south side analyst covering retail, and you would have so many retailers blame weather for bad quarters, and you'd go into the store and see a bunch of chartreuse

sweaters and be like, you guys didn't, cute well. but they would always point to the weather as, the dog ate my homework. i think shrink is becoming that where a few retailers talked about it and others think, that's a good get out of jail free card in terms of envenn story, when they double bought because of supply chain. i think it's just kind of smoke and mirrors. >> guy, what color is chartreuse? >> it's like a yellow green if i'm not mistaken. you put me on the spot. it's neon, and i know the answer. you shouldn't do that. and i don't know what the problem with chartreuse is. i have an entire chartreuse room. i'm just saying. >> i'm sure you do. >> fantastic. all right, coming up, we only had four trading days on wall street, but that's still enough to bring a chart of the week. we'll reveal that ahead. but first, industrial losses, will the trend continue? our chart master is here to tell

us what direction the sector is heading next. stick around, more "fast money" in two. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley.

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the xli down 3% since labor day. recalling, southwest, and boeing some taking the sector lower this week. where does it go from here? who better to ask than carter worth of worth charting. >> all sectors down this week except for utilities and energy. let's look at a few charts and try to pick apart not only the sector but some of the sub industry groups and so forth. the first is a comparative chart. you see three lines. the message here is the middle, the industrial sector, that's every industrial stock. but what you see on the top of course is the divergent between machinery stocks and road and rail stocks, right? so that big, heavy industrials such as couplens and packard and eaten, not to mention caterpillar and deere are outperforming the sector. rails are understood performing. another way to look at this

chart is old the sector as a constant. now you see the real -- you're talking about 2,500 basis points of divergence, and at this point the question is, which has the proper message? if you have machinery stocks breaking out to all-time highs, how do you get a recession? if you've got road and rails rolling over, something can't be right. either way, i don't like the sector. let's look at a few other charts just to sort of pull this all together. there is the machinery subindustry group. you can see a well defined move and breakout to an all-time high. take a look at road and rail next chart and you can see we could never get to the all-time high. put them all together, it's the xli, the spider that measures the sector. that's the final chart here. what you're going to see of course is a slight breakout, but basically failing. so i think at a minimum we're going to come back to trend, and

that trend line is picking up the covid low. buy, sell, hold, overweight, underweight, you want to be underweight. >> if you held machinery stocks, does the chart -- the chart looks different already, so -- >> you want to try to favor relative strength. things that aren't working, you get what you pay for in life, right? all things held equal, you want to go with those that are outperforming. >> thank you, carter. bonawyn, your take on industrials? >> it's tough. they've already broken through that 50-day moving average and it doesn't necessarily look good for them or bode well. the other concern is we talk about changes in leadership, and we've seen outperformance of energy, moves away from growthy/tech names. if we don't have industrials picking up steam, it doesn't bode well for the overall markets. carter's points are right on point, and overall it does paint a slightly grim overall picture

for the market. >> amazing how just a few weeks ago by mid july end of july we were talk about expansion of the market and the breadth, and there you were. but carter hit it. it's a false breakout. ifyou look back six months, you can see that industrials are underperformed the s&p by almost 8% and transports by 7%. this gets you back to that place, are these valuable traps. no question these look interesting. heard nothing but reasonable earnings. i think it is the -- favors big tech. tells you where people feel comfortable. >> yeah. guy, your take? >> carter pointed this out in russell a couple years ago. basically same chart. to think this is going lower you have to think caterpillar has a bit of a top from beginning of august and that unp, which i think is the second largest holder in the xli will continue to rollover. if you have a unp chart, throw it up. this made an all-time high in

february of 2022 and has not gone up since. as usual i'm with cb dubs. what's fuelling the fire and what stocks are set to benefit from that boost? the trade after this break. and later on "options action", banks have been been act well, but our traders have a way to profit in spite of ugly action. more after this. ( ♪ ♪ ) ♪ please don't go ♪ ♪ please don't go ♪ ♪ please don't go ♪ ♪ please don't go ♪ ♪ don't goooooo! ♪ ( ♪ ♪ ) ♪ don't go away ♪ ( ♪ ♪ ) ♪ please don't go ♪

welcome back to "fast money." time for our chart of the week and it is -- well, crude, obviously. wti crude climbing more than 2% and notching a second straight week of gains. the commodity hitting its

highest level since earlier in the week and settled today at more than $87 a chair. the gain taking energy stocks to new highs. you flagged the move in phillips 66, guy. >> >> if you look at a chart, throw that sucker up. we're up against levels we saw. these levers under the radar energy screens have been playing higher. a lot making all-time highs before our very eyes. i don't think the market is paying enough attention to energy. despite the move the commodities had, despite the move the services have had, i still think there's room to the upside in a lot of these names. >> agree. we're seeing rotation in the energy sector. the breakout in the oih is decided. you're at essentially four and a half highs in slumberger. you could inflation adjust back to 1985. there's a real story here that i

think energy prices stay high. look at the move oil had this week with the move in the dollar. we haven't been talking about the dollar tonight, but have been talking about it a lot lately. that's usually terrible for oil prices. >> there's also some thinking that saudis need oil to remain high to pay for the projects they've got going, so it's in their interest to keep oil prices high, and therefore we should be looking at wti and brant as at least have a floor if not room to move higher. >> i think that's right. they've shown a very strong commitment to being able to hold back on supply and push pricing, and i think people mistakenly thought, well, if china's not doing as well as we thought that's okay, that's less pressure on the demand side, but they're thoughtful about keeping pressure where it needs to be. a real problem for us in the u.s. is the reason investors aren't paying attention is if oil and gas prices are higher,

inflation has to anchor higher and the fed has to hold or raise, and investors are like, i don't hear it. no one wants to admits that a pretty big problem in consumer confidence. >> we saw the impact of the move in oil, and it's been a swift move. that's what the airlines highlighted this week, bonawyn. investors can have ear must haves on, but on the other hand there are plenty of stories telegraphing the impact of the oil moving higher. >> yeah, as julie said, investors typically hear what they want to hear. to tim's point, since july dollar and oil moved lock step. i don't think that will hold. i'd be looking for divergence between the two. >> time for the final trade. around the horn we go, julie. >> one of the -- is doing well is ollie's. still reporting traffic. >> we're going to did a field trip to ollie's. i know it.

>> whatever it is. >> bonawyn. >> we spent that the show talk about shrink. one of the companies that came out is foot locker. i'd still stay away with this one. >> an outlet with bargains. >> got to go. >> guy. >> big chartreuse weekend at the adami house, okx dental. >> big year on the set. energy transfer. >> that's does it for us on "fast". don't go anywhere. "options action" is up next. ♪♪ at morgan stanley, old school hard work meets bold new thinking. ♪♪ partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. because grit and vision working in lockstep puts you on the path to your full potential.

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right now on oa, when there's little money moving sideways in the mark, look to where money sits in the banks. then thinking of setting up an apple options trade before the big iphone event next week? well, don't. we've got a wiser apple alternative play. finally, a look back two for one deal on our recent consumer staples plays in hormel and