Since the great recession. Is now the time to start worrying we asked this question because we said it only lasted a couple of hours, no big deal. Here we are, two weeks later it has been at, near or inverted for the past two weeks. Although. 3 back in may. Three months ago, true. Now we have all of these indicators flashing recession, recession, recession should we you should always be worried i think, but i think with worrying comes pete uses the word all the time, trading opportunities. I think thats what you have now. He said something a couple of weeks ago, stay with me, the volatility will be volatile. I agree with that. I will Say Something that ive been pretty steadfast, i think the market will bottom, s p 500, when the vix prints. I think the trend will continue to be lower for all of the reasons you mentioned. There are other reasons as well. It is not just the u. S. china trade. Quite frankly, it is not just this inverted yield curve. Other things are going on as well the market just seems a little tired here, and you go back and look at the way facebook reacted after they reported a couple of weeks ago. You look at the way amazon reacted when it reported, and to a certain extent, although not nearly as much, apple as well. I think stocks have been trying to tell you something. The russell has been trying to tell you something i think, again, the s p is headed towards lower. It was trying to tell you something big. It traded today, closed at a low it has not traded at since january, late january. So down 16. 5 from the highs i think it has been selling you something similar to what the banks are telling you too. Look at the price action of the banks today. They opened up when the market was green but went red quickly and stayed down. A really a lot of them, citibank, bank of america are setting on support levels. It is one group that does not like the inverted yield curve. If you look how they acted since that happened here so to me i think you have i just say i mean the irony of that. I think you are right. If you overlay tenyear bond yield, the tenyear treasury against small caps or retail, the two parts of the economy that have so far not rolled over even though those are parts of the market that have again, the country is based upon the Small Business largely if you think about that, they should be feeling very good. Americans confident in going out to get a new job right now is getting them to spend and right now that part of the economy is doing fine. Pete . I have to tell you, guy, you were talking about volatility. Yes, it has been extremely volatile i expect it to continue. I dont know why we wont see even bigger fluctuations as we watch the market because right now we have little volume in the market if you look at the last six days shall and i talked about this earlier, but 5 million under our daily average on the Derivatives Market right now the volumes are not there. What is it telling you these moves could get more exaggerated. I think it will be something interesting, along with the algos that kick in but youre right. When we are trading at 20. 5 on the vix right now, why couldnt it spike up more we are a tweet away from seeing a volatility index heading towards 30 in my opinion now, we saw it get up towards 24 i think we get any kind of a break to the down side, we will see a monster, but it will create opportunity there always will be opportunity i think in this market we have gone through the earning season for the most part we know what the companies are looking at, what theyre projecting Going Forward because of that, it gives us great opportunity to look and find the names. We have been talking about. 2 as an indicator. Our next guest is looking at Something Else chief economist and strategist David Rosenberg tweeting today, we now have had three months of a threemonth tenyear yield curve inversion. The track record this has had in predicting recesses, 100 . Wow. Joining us now is David Rosenberg. So, david, we understand that you think that a recession is already here youre also the strategist w mentioned. What do you do if you are in that camp, if you believe that well, look, the yield curve inversion leads the economy, so i didnt say the recession is actually starting right now and i think that everybody is quite correct, it is hard to get an early recession when the consumer is still spending you know, that is still the case i think the question we want to answer as economists is in three, six, nine or twelve months, what is the shape of the consumer going to look like . The consumer doesnt operate in isolation of the other parts of the economy any more than the u. S. Economy operates in isolation from what is happening around the world it is just a case of the lags. Now, look, im a Firm Believer in the yield curve, but it is not the only indicator around. You have so many other confirmations out there. If you concocted a cyclical sock index from the s p 500, which weve done, we are almost back in bear market territory if you look at the base metals from the crb, we areost back in bear market testimony you have other market indicators right now actually telling you that a reces not going to say necessarily baked in the cake just yet, but that the risks are extremely high and theyre on the rise. Thats, i think, the message from the yield curve, is just that confirmation indicator from Everything Else were seeing right now. So in terms of the consumer, david, a consumer that is confederate, a consumer that continues to spend, so far at least, what do you look at around the consumer that could impact that behavior and bring that major part of the u. S. Economy down or slow that down well, i think that when we start to see a situation where employment growth slows sufficiently that you start getting a rise in the Unemployment Rate on a sustained basis, thats going to lead to a decay in wage growth and thats going to have an impact on Consumer Spending right there. We have already seen if the jolt data is although firings are extremely low and companies are holding on to Skilled Labor because of the shortage of Skilled Labor out there, that we also have a situation where hirings are actually dissipating. So the question is not even if payroll is going negative, but slow enough, Household Employment slows enough that unemployment goes up, i think it will be a signal for weaker wage growth ahead, and thats one of the indicators you will be looking for. Everybody is waxing about todays Consumer Confidence report, and what i find is that people look at the headline and then pontiff indicate aboicate great the index was. Remember, theres two components, and the expected index rolled over in august. When you are looking, for example, at expectations of employment, it was weaker. Expectations of labor income, it was weaker when you are taking a look at buying household appliances, they rolled over the expectation components of the confidence surveys do a better job leading the consumer than the headline indices everybody gazes a. I would say that the internals behind the report today didnt leave me with a warm and fuzzy feeling for Consumer Spending in the next few months. David, we were talking about the russell 2000 small cap stocks in an earnings recession right now. I heard you talk about bbb debt, corporate debt lets move away from treasuries where we are spending time talking about the inversion, and you had the concern you think theres a potential for a lot of that to go to junk, which would be bigger than sub prime in the under performance in the russell 2000 telling us something about highyield debt and something that investors should keep their eye on that theyre not paying attention to as we think about the treasury yield inversion . I think it is a great point, because ordinarily you would be seeing that the mega caps or large cap multinational exporters that are so susceptible to what is happening in the trade side would be the areas underperforming, and if the small caps, which have much more domestic economy content to them so i think the point is very welltaken that a lot of this is actually coming from a recession, if you want, or certainly a very significant weakening in Capital Spending in the united states. Now, actually cap x is weakening around the world and part of that is related to the general heightened geopolitical trade uncertainty, but i would say actually at the beginning of the year in my report was that the big rip for the economy was if we dont see the bbbs get downgraded into junk, looking at how over extended their Balance Sheets are and looking at the start of a huge refinancing calendar, Something Else was going to happen. Why have we not seen, for example, bbbs get downgraded why havent the delinquency rates gone up . Because companies are deleveraging and paying down debt nothing wrong with going on a debt diet, but it comes at the extent of something called aggregate demand growth, which is gdp i think the big surprise this year would be we hung in reasonably well. On the other side Capital Spending has been weak, and todays durable added to that, and the view for Capital Spending so the other dynamic of debt deleveraging coming at the expense look, by the way, it is not just coming at the extent of Capital Spending. All of a sudden stock buy backs are starting to subside as well. I say it is encouraging we are not seeing the crisis of fallen angels, bbbs getting downgraded. What comes up the other side is the leveraging cycle, which comes at the expense of economic activity. David, thank you so much. We have breaking news so we have to run that breaking news on peloton. Leslie pickers has the story leslie. Reporter hey, melissa. Peloton revealing the filing, especially catapulting its ipo in motion with placeholder of about 500 million for a offering inevitably that number will change as it gets closer to the launch date. Digging into the financials here, some really interesting stuff. 915 million in revenue for 2019 they break it out in terms of fitness products, subscription and other. That number though, that topline number doubling year over year, on losses of about 200 million over that time frame. 511,000 connected fitness subscribers in 2019, and they say the average net monthly connected fitness churn is about. 65 for 2019. They did file with a dual class share structure, 20 votes for class c shares class a gets one vote. The Bank Managing the deal is Goldman Sachs and jp morgan. Leading this one now reportedly theyre seeking about double the valuation from the latest round, which where they were valued at about 4 billion. So far theyve raised about a billion dollars in venture capital, of course, noting in full diss closure that comcast and nbc both have a stake in peloton, the Parent Company of cnbc if you recall, they confidentially filed in june this revelation of the filing today means they have to wait about 15 days before they can officially launch their ipo process in a roadshow, meeting with investors and so forth. They need to wait at least two weeks to do that before we start to see movement there. It means it will come back in two weeks later, we could see a listing if the process moves as quickly as possible, but time will tell. Otherwise, still digging through this multihundred page filing so we will let you know if we learn anything else interesting. Back over to you. I want to ask you about the key metrics theyre using. You mentioned average monthly connected. Do they have per user i mean im trying to understand the benchmark. Yes, the economics here so we havent gone through the entirety of the filing to get down to the Unit Economics yet, but we will dig through it and let you know that exact answer to that question and how much each person pays but it is worth noting that, you know, this Company Operates as both a Hardware Company and a Software Company. Right. So if you buy the bike, say, for 2,000, you are still paying about 40 each month for that service, that subscription fee on top of that it will be interesting to see how investors value it from that standpoint. Unless you at a gm. Gym pays for it and you log in. Exactly s w thats why i asked how much revenue per user. Thats a good question. I will let you go through the filing what do you make of it i am a huge peloton fan. As am i. When you say that, it is like when you go to best buy and you sort of window shop and then you buy it online, thats the same thing no, it is not. When you go to the gym and log on. Peloton is being paid for by the gym. Planet fitness. I log in, nothing wrong with that. Not that Planet Fitness is a good comp, but the stock was 20 stock, traded up to 80, 60 now i think peloton has better growth you pay about 500 a year for the subscription and people love the product and the treadmill is better than the bike. What is the comp . I dont know if we have it. Again, it is another one of these sectors where you are creating, i dont know, fitness as a service so if i may . You have a dynamic here where Planet Fitness costs 10 a month. You can do a digital app for 20. It is easier to log into the digital app, even though you would think theres a bigger bargain in the 10 Planet Fitness. I think theres a limit how much they can grow. 8 billion from 4 billion last year, thats the real key. Having the metrics to see whether theyre i dont know. Bottom line is we still need to see the numbers. Gold and silver shining bright today, but one technician says the charts are showing cracks in the metal trade. He will explain. Plus, why one strategist says the biggest bubble is about to burst. He will tell us what that means as the obsession with the ceiogrips the market more fast money right after this do you have concerns about mild memory loss related to aging . Prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back to fast money. Gold getting a bid while silver hit an alltime high while stocks fell. Theyre betting gold is about to bounce higher. The next guest says that the metals are about to lose their shine. Lets go off the charts with chris verrone. Take it away. Thanks, melissa when you look at the gold chart it is hard not to like it. You have come out of the big base, in a sevenyear bear market we know it turned, but our concern tactically is how stretched gold has become. About 16 above its 200day moving average, the most stretched we have seen in a number of years. So i think if you are long gold here, you have to think about hedging the position what i want to show you here is the shortterm shot. This is just this year were showing gold with its 20day moving average, which has been support here, support earlier in the year, and it is where we broke out from in the middle part of the year. I think if gold correction or if gold is going to pull back here, that 20day moving average is going to be your line in the sand you start to break that, i think it risks something deeper, maybe back into that 14. 40, 14. 30 range. I think ultimately the longterm chart is okay. It is the shortterm picture, how stretched it is, that has us worried. Sentiment has gotten very aggressive these are rolling threemonth slows into the gld they have absolutely surged over the last number of weeks this is a crowded trade. It is stretched. I think sell some calls, buy some puts, protect the position here if we look at silver, it is a similar situation except one change silver for the first time this entire cycle, it under performed gold, it is starting to turn here i think in relative terms owning silver over gold may make some sense here what i want to be mindful of when you think about gold, it is the same trade this year as utilities, plus 20 , bonds, plus 20 , gold, plus 20 . So i think if were going to start to see some cracks in gold, i would suspect we see cracks in those others as well longer term we know the chart is fantastic. It is about what do we do in the short term we think it is too stretched hedge. Chris, come on over jonah will bring the chair in. Yeomans work by jonah. Bringing the chair in yes. Nice shape. Even in the short term we see a pull back in the safety trades, does it mean we see a bounceback shortterm in some of the other sectors that have lagged im not sure i want to go that far yet. Okay. I think when you look at what has been so telling about the last number of weeks, despite gold overbought, despite bonds overbought, despite utilities overbrought, we havent seen the kratch yet you have to use some of the stops. The 20day moving average on gold has been support all year long you will get a deeper pull back in gold, it probably starts with a violation of some of the levels. If you see gold silver ratio starting again, you started to talk about silver is outperforming as it should we got to basically alltime lows on silver gold. Is it indicative of a change in risk profile you know, it might be silver outperforming gold is a little more of an industrial. Yes. Im curious if that may at least be a similar message to what we are seeing in surprises. Economic surprises start to turn up here. I would be curious if copper could start to get a bit of a bid here as well theres record shorts in copper right now. It is a bad chart but theres record shorts. I think we need to be careful in this environment are position is too extreme. Could there be something with gold we mentioned the Deutsche Bank note with the Political Uncertainty and with Central Banks, theres fewer alternatives to the dollar be the safe haven so theyre compelled to go into gold. No question. I hate to say things are different this time around, but could they be . Yes if you look over the last 18 months or so, Central Banks have been absolutely buying physical gold and it is starting to manifest itself in the price listen, i understand what chris is saying, being disciplined, taking money off the table in something that has run a significant amount makes sense i still think this has legs, and dan spoke to they. Now you have 30 of global sovereign bonds with negative yield. If you back out the u. S. , that number is ridiculously high, which is why i still think gold has legs here. I think the big question of gold, and it is reminiscent of the late 90s when gold started to lurk, people started to wake up to it but you didnt get paid until 03, 04, 05. What is gold telling us now about the future in 2003, 2014, 2005, it was the beginning of a massive super cycle which was reinflation. When we talk about gold, negative carry it is the first time gold has a positive carry in maybe its entire existence guy, you touch on it it is a meaningful reason gold worked here. With the backdrop, what does the s p chart look like . In no mans land. I think tony said it the other night, in this 22, 24, 25 lane i think the big level is 27. 30 on the s p 500 if you violate that, it will be the first lower low of the cycle. We dont want to see that. 27. 30 i think is the key level for longs here. Chris, thank you. Nice glasses. Great looks great handsome. I wonder if theyre real or just glass just for the fashion of it . You never know he sounds smart he always do. For more on the rally, head to cnbc. Com. Im melissa lee, you are watching fast money. Here is what else is coming up on the show. Two tobacco titans are looking to team up, but the market appears to be nixing the nicotine well explain. But first, a 16 trillion warning. One stop wall street strategist says the biggest bubble ever is about to burst hell make his case when fast hell make his case when fast money returnsst of that debt is actually from credit cards. Its just not right. But with sofi, you can get your credit cards right by consolidating your Credit Card Debt into one monthly payment. You can get your Interest Rate right by locking in a fixed low rate today. And you can get your money right. With sofi. Check your rate in 2 minutes or less. Get a nofee personal loan up to 100k. Welcome back to fast money it is a 16 trillion warning that could have a huge impact on the entire Global Economy. Our next guest says the biggest bubble ever is about to burst. Lets bring in julien manuels. Im worry about the biggest bubble ever about to burst. You shouldnt be worried about it bursting because if it bursts in the way we think it is going to burst, it will be in a positive way wow. Think about this. Seven, eight years ago, everyone was talking about the great rotation trade where we all would sell bonds at 3. 5 , 4 yield and buy stocks here we are. We are negative 70 basis points in germany we are 1. 5 in the u. S we are at alltime highs people are very worried about recession. We think that the policy response by both the fed, the European Central bank and ultimately the white house and the German Government is going to be enough to cause the bond bubble to burst, and were going to get a resumed rally in the stock market. You are banking on the bond bubble bursting at the long end of the curve. Yes. So the curve will steepen yes and actually this may seem counter intuitive but it works in practice. If the fed is successful, and we think they will cut 50 basis point on september 18th, surprising the market in a positive way, because we dont think that the story that, you know, the fed does know something that the rest of the world doesnt know applies, because theyve said it a number of times, that they dont know anything more. But that is likely to stoke inflation expectations, which will cause long yields to rise in fact, one more point. What was interesting about todays action is you havent seen this happen very often, but yields plunged and the price of oil rose and inflation break evens rose obviously theres always lots of noise in that, but it is not a bad sign. So appreciate your always very balanced approach to this the headline sounds scary but youre saying theres a blessing in here. But key to that is you are saying that ecb policy is going to work. Our yields are getting dragged lower by bund yields, not because our economy is going straight downhill . No question about it. But what i several weeks is that the germans are waking up. Their economy is about to go into recession they are likely going to take action look, we have seen the response in the market to aid the inversion of the yield curve and, b, the president as tweets in the last several weeks. All it takes is actually some form of daylight and against this september 1st tariff deadline we will know very soon whether there is any daylight forming with china, to really sort of send the bond market moving in the other direction. Things are very, very extended. Julian, 50 basis points cut in september is not a midcycle adjustment, it is a rate cut cycle here what are your thoughts about i know what you said about the stock market, but generally if you look at the last 20 years it has not been positive for stocks when we start cutting rates, especially from such a low level here. Theres no question about that i would say that when they cut rates, whatever they do, and, again, we think it is 50 on the 18th powell will be very careful not to categorize this as a midcycle adjustment or a cutting cycle, just something that theyre doing in response to the accumulating stresses in the Global Economy and to mitigate the risk of clearly even if the trade war shows daylight between now and september 18, you still have brexit, an extremely contentious issue, as well as iran out there. Julian, good to see you thank you. Thank you. Julian emmanuel so we have just had the guest. So following the rule, while i say if julian is right and im not bringing him back i would think that the banks would be screaming buys under that scenario now, i dont necessarily agree, but if the folks at home agree with julian. Im going to give you a special dispensation. Wow, i didnt know you could do that. I have the power to bend the rules. Are banks a buy . We think they are. Okay. Furthermore, we think that the market is telling you that the cyclical areas will need to work for us to be right, that the market will go to 3,000 by yearend. Julian, thanks once again there you have it. I dare you to bring him back. Wait. One market he is saying is telling us that, because cyclicals you would think that banks are obviously cyclical we saw industrials turn down we saw Consumer Confidence really great, but the bulk of retail looks horrible. So i dont you know. What about financials though . You have been more negative and mostly right on this whole thing. Yeah. Do you agree . Is that something that no, i think that the growth right now and what Central Banks are doing, we are literally on the precipice of seeing an experiment unlike any in the phenomenal universe has seen we are going to zero, okay our rates are going back to zero from 2. 25. Every central bank is tripping over each other to get theirs lower. Can i Say Something i have no idea what happens, but all i can tell you is this, the japanese bank, 30year lows. Euro stock bank index, 30year lows our banks act like dirty rotten, you know what, and i dont know what happens next. Hold on. It is much different from the european banks though. Our banks outperformed japanese and european banks, i dont mean in this cycles which they have but clearly in other cycles. They have. Back to the fed if it was a mid cycle adjustment, whether the fed was doing that or not, it is bullish for equities it means that the fed that got off the hawkish tone with the market not fall tinge apart. If julian were here and we could bring him back a second time, but he is gone now. He is really gone he is gone. But he talks about they are dead set on the 50 basis point cut. Thats what it sound like to me. What if it is not that is that going to be something that causes some turmoil with the markets, that it is not enough i mean i think we went through that cycle where a lot of people were hoping we would cut by 50 basis points this last time, we didnt what about that . What in they dont do it this coming time, is it a negative for the market coming up, shares of auto desk in the red on earnings. We will break down the results straight ahead plus big tobacco, one big deal on the horizon we will tell you about phillip morriss potential merger with altria can light up the tobacco trade. More after this. Welcome back to fast money weve got an earnings alert on auto desk. You see falling in the after hours session lets get to rahel solomon with the details. Reporter the Software Company falling sharply after lowering the full years earnings estimate. They point to the continuing trade war with china as one reason saying in part, while we continue to execute well and are not materially impacted by current trade tensions and macro uncertainty, we are taking a prudent stance to our second half fiscal 2020 outlook despite these nearterm headwinds, our recurring revenue models is much more resilient than in prior cycles they make products from everything using architecture to fashion. The company falling more than 11 right now, 11. 3 back to you. Rahel, thank you. Rahel solomon. Dan, your trade . I thought this one was interesting and it trade at ten times sales, 53 times earnings it was down from the recent highs a few months ago, and the guidance the stock down 11 in the after market. The guidance was that bad. I think the kmen saer about why theyre low in this market it was bad. But thats really important im saying it is a high value but you have to deliver when you have a high valuation like theyve got and they didnt. They gave you weaker than expected guidance and because of that they will be punished in this environment right now you have a high pe and you will get slammed. Check out shares climbing higher today, 400 on roku the analyst writing, rau tus most recent nine quarters of those against netflix, roku achieved 9 quarter on quarter growth compared to netflixs average of 8 . William blair has out performed rating on both of these streaming giants, but with roku growing faster than netflix in this cycle, is it a better place to be than the 400 gain on the year, pete well, i own netflix, so my answer would be i love what roku is doing, but when you look at these two and you look at market caps and where they are right now, in the cycle of where they are, netflix is far more mature company. The fact that theyre even that close i mean you would expect roku to have better growth, wouldnt you i would. Because of that, i look at netflix and think the biggest competition still to me will be disney i think the whole streaming issue with them and disney will come to a head over the next six months, a year, Something Like that they have a bit of a headstart but they have International Growth we all point to all the time so i am a believer right now at least in netflix, but roku is doing everything right but i look at this measurement as almost more bullish towards netflix than it is for roku. Didnt we do a would you rather a couple of weeks ago. And you chose roku. I stay with the roku. I understand valuation is stressed but it has been stressed for quite sometime. They seem to have the you start to see analysts on the back of the august 8 release if you want to play would you rather, again it is roku. Hard to scream value when talking about either netflix is a ridiculous valuation coming home to roost roku is what netflix used to be. It is vendor independent on some level. Disney plus, very happy with roku, et cetera, et cetera so roku is the pure, final mile. Not really. Oh . In front of apples introduction of their service and they have apple tv and they will be smart connected tvs that will pro live rate like crazy. I dont understand the hardware component of this i know theyre at the early stage of cutting the cord so you will have winners like this. To me it trades at a multiple no one can buy it no one can buy a Hardware Company that does this, especially when you look at how wellfinanced these Software Companies are that own the content and can develop their own original content i know this one is up 380 yeartodate you know, have at it i mean why would you theyre going to go going in the dust bin with the fitbits and other go pros and that other crap. Thats nice. Yeah. Thats a good expression. A thing you know, the trash can. The smart tv thing is very exciting for me because i have the sony triniton xbr and it weighs like 400 pounds i have to get rid of it. Coming up, chaos in costco as the retailers big china debut was flooded with customers why these images could be telling the real story about what is happening inside of china. Later, deal talk heating up between two tobacco giants, but could a merger help light a spark in the beatendown industry stick with us. Fast money is back right after this i planned each charted course each careful step along the byway much more much more than this i did it my way announcer verizon is americas most awarded network and the only one with the galaxy note10 5g. Right now, when you buy one, you get a galaxy note10 free. Thats verizon. We believe in education built for all people. , [woman] snhu was the best experience of my life. [man] without snhu, i wouldnt be the leader i am today. [woman] i graduated high school 19 years ago. I still finished. [man] in the military, you feel that sense of accomplishment. Thats what snhu is. You will march from this arena and say to the world. I did it. [woman] you did it. I love you. [graduate] i love you too. Welcome back to fast money a big tobacco deal possibly in the works as Philip Morris and altria confirm theyre talking it would reunite the two tobacco giants as they try to combat a slowdown in tobacco use could it spark a bigger rally . This is about combining the market for icos, which is the alternative tobacco product, along with jule. Could it work . Theyre not dealing from strength theyre coming together because they believe the ability to move into lateral businesses, whether it is ecigarettes, they own 25 of cronos, which was not a good purchase frankly you have a case where they have massive market share, massive Consumer Companies with distribution it could be formidable if it could go through. It is interesting to see. This is a company that it wasnt that long ago split themselves up the fact theyre wanting to come back together, like you said, it is almost a point of weakness though and theyre trying to circle the wagons right now, mel. The interesting thing was just last week on friday there was monstrous call buying in here. So somebody was right. Somebody sniffed out something it is interesting to watch the whole process, because as we move further down i think distribution will be huge. Thats the one aspect that i think people are looking past right now. Price action though, you have to be concerned. I mean this is a stock that would send a whisper of the december low, which i think was 42. 5 huge volume day. It seems it can make a series of lower highs and lower lows i mean if you caught that move, which pete probably did, thats great. But the stock doesnt really feel like it wants to accelerate to the upside, especially when it reversed today on huge volume. All right well, tim had mentioned pot stocks up in smoke today all falling deep in the red. Kind of a mixed bag this year for the Cannabis Space as companies try to keep up with the surging product demand, investors wait regulatory updates on the budding industry, so to speak. Tim is all over the space. Sits on the Advisory Board for three cannabis stocks. For tims diss cloclosures go to fastcnbc. Com we are hoping capital, meaning investors in their share . I mean traditional Capital Markets are not open for the cannabis industry. It has been a major issue. To be clear, some of the biggest names in the industry, certainly the canadian names, and the trade of being long u. S. Over canada has been the right trade over the last couple of months very concern about acid purchases that went on six, 12, 18 months ago in terms of good will charges against some of the biggest lps in canada. The good news for the sector is in the last three or four days, certainly the last two weeks, you had cresco labs and pure leaf reporting fantastic numbers. Pro form au numbers over 400 million at pure leaf those are success stories. The Opioid Crisis and the front page news of where Integrative Medicine can be an alternative for this, thats just one part of the investment story. So Capital Markets are the big issue right now for this sector. Are these the kind of stocks you want to be in in this kind of market . You know what im seeing right now tells me know. It is amazing because we talked about metals earlier, we talked about gold and silver and the rest of that im overloaded in those things because the option activity has been incredible in that sector since the end of may and they have taken off to the upside it is who had but you dont see a lot of option activity around stocks theyre either already in the cannabis industry or moving towards the cannabis industry. I guess the question for tim is do they are there u. S. Companies right now that would be smart to prey upon the drop that weve seen out of these stocks right now many of the stocks, you look at the stocks, up 60plus percent it would seem to me if you are looking for an area to enter into a partnership or buy shares of, now would be the time. Theyre going to be a buyer of extreme pain out there. Some of the big u. S. Multistate operators are in a fantastic position to buy weakness in the public market. At some point you will see some of the public guys trading at a discount to cash based upon their ability, their inability to access traditional Capital Markets. Coming up next, what trade war . The tale of two chinas why the images from costco opening in shanghai could be telling a big story on the state of things in china we will explain. Plus, take a look at our cramer cam. Jim is talking about how to make money in volatile market, coming up in mad money at the top of the hour live from the nasdaq in times square much more fast money still ahead. Options action is options action is sponsore jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Ameritrade its just complicated. Stepbystep options trading support from Td Ameritrade through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Welcome back to fast money it has been a rough month for retail, but check out costco, bucking the trend, surging 5 today. The Options Market is predicting they will see bigger gains before the week is out mike khouw is in San Francisco with the options action. Hey, mike. Hi there. There was quite a frenzy at the costco store in china and theres quite a frenzy in the Options Market, too. It traded over six times its daily call volume, trading over 60,000 call contracts. Most of the activity was concentrated in the options that expire at the end of this week earlier today we were seeing the 280s and 285s, but obviously as the stock appreciated they had to reach out for higher strikes. The one i was looking at was the 290, 2 1 2 that expire on friday they traded hands for an average of 2. 15 and closed just a little over 3 i think it makes sense when you see people making purchases of these type of calls, theyre risking a little over 1 of the current stock price, betting it could go higher. Considering it moved 5 today alone, you could see theyre quite reasonably priced if you are making these kinds of shortterm bullish bets. Thanks for that, mike mike khouw in San Francisco. What a scene the bulk retailer held the grand opening in shanghai today. It was forced to close doors early because of overwhelming turnout. That got us thinking you remember the dress that took the internet by storm, some saw blue, gold, white, black, all over the map it was the same image but they told two different stories depending on who was looking at it. Oh. So we asked does the same apply to costco in china when you take a look at the scenes one is on the left is blue, the one on the right is gold are you seeing a company that needs china for the next leg of growth or a Chinese Consumer that doesnt care about u. S. china trade tension or buying from a u. S. Company. It is a complicated question. Dan, what do you think . It is a smart question actually. The same thing, dan. You know who is not in china . Costcos biggest competitor in the u. S. You know, it is amazon when you think about it amazon has prime and this is something you would have thought would have held back the costco story. I think it is fascinating on a lot of levels. Theres a u. S. Model that could clearly work there, and it shows you that in day one. It could be a huge leg of growth by the same token these guys import a lot of merchandise for their u. S. Stores from china this is another situation just like apple, they have to walk a fine line with the u. S. And tariffs and over there so to me i think it is a great opportunity obviously for costco what do you think, guy . I would say well, first of all, what color is the they need it for growth the blue the blue. So it is the other color to me. Gold. It is gold. Costco doesnt need anything, quite frankly. Go back to may, by the way, when the market was rolling over. We had Carter Braxton worth over there at the smart board do you recall that i do. He talked about costco, which is hanging there at 250 at the time, an alltime high, and it was telling you something. We had that conversation look at it now it is about membership it is about people like pedro walking in there. Every week. Every week, thats what it is about. I walk through there, i get the samples and i buy a lot of things from them, but it makes sense to me. Theyve been there for a while, obviously through allie baba, so theres a presence for costco. Theyve been there since 2014, Something Like that. I think it is interesting. I think the chinese are excited to go in there and find those deals in person and get them right then so it makes sense to me that they get the crazy traffic numbers. You know, they had to delay schools and all of that kind of thing. I mean absolutely amazing what happened today because of what was going on it is incredible. So no impact from you are like Chinese Consumer, they love american brands. They will keep going as long as they want to go . I would absolutely go with that, yes. If you look at costcos u. S. Samestore sales in july, they were up 5. 5 , which was slightly better than expected theyre not falling on their face here. Right. So guys point is thats a nice Growth Business for them. The question is, if thats the reason the stock has doubled in 2 1 2 years and i dont think it is. I think it is excuse, and i think their ability to actually take market share in the u. S. What stock do you own starbucks. Here we go. Starbucks, how much of that multiple is based on china growth and if the Chinese Government does something to hurt starbucks or to make it more difficult to open up stores, which theyre very aggressive about in china, then what happens . Youre asking me to give attribution on the starbucks move over on the stock, what percentage of that could be construed as china how is the story. It is kind of 20 the u. S. Samestore sales, the ability to pass through price increases, the fact that coffee prices are dropping through the floor, their margins are part of th. All right up next, final trade final trade is ponceored by interactive brokers. Final trade time pete najarian. Richard kinder keeps on buying love this name gitty up. Tim like altria in this deal. Not a lot of details, but if it is a merger of ee ee kwools, we will see. A big night with the cubs. You know, a couple of weeks ago we thought there was Something Weird going on in blackstone that uk isser made an alltime high today, bx. That does it my miegs is simpssion is si make you money im here to level the Playing Field for all investors. There is always a bull market somewhere and i promise to help you find it. Hey, im cramer. Welcome to mad money. Welcome to cramerica other people want to make friends, my job is to make you money. Call me at 1800743cnbc or tweet me jimcramer. I figured it out this market is like a needy