Yeah. The only exposure i have at this point in time is home depot and theyre the one that has battled them really well when you look at the growth they have done online but those that are competing and can go after amazon, because that is the big elephant we talk about it all the time, you look around out there, those that are competing well against them, those stocks are doing pretty well. Look at walmart, look at home depot. Costco to some degree. Im beginning to tihink when do look out on that landscape, you say maybe theres five names before i dont know the thumb goes away, this finger goes away, two or three maybe. Thats what it seems like. Its how quick those have reacted and those who have prepared for some of whats going on in terms of the online competition world. Those that have done that, i still put best buy in that category as well best buy has beat amazon at their own game walmart is doing a great job of competing aggressively when you look at what walmart has done in the last couple of sessions, not just a buyback, its about what they have done previous to that, how they have competed online and trying to make it more streamlined for the customer. So, joe, sears is getting hammered today ulta is getting hammered today williamssonoma cut to a sell. J. Jill lowers its guidance. Under armour price target cut. Walmart and even though goldman stays uy, they take it off the conviction buy but lets theres like shade being thrown all over the place. Lets take walmart and put it to the side. Lets not put walmart in the conversation of the companies that you mentioned. I hear you. But look at what we just showed on the wall. Heres the scary part of all of this. They had a bounce in august into september, a lot of these names, and everyone believed the bounce i think as you approach the end of the year, you have to give consideration to tax loss selling. The fundamental story here, nothing about it has changed for any of them. My biggest concern is what the problem and the contagion going to be in the debt markets as it relates to the retail space. If youre talking about a pvh, thats great but for the rest of these names, a couple of them wind up on the pink sheets. Joe just hit on a lot of important points obviously i know a little bit about this sector. Im having a fine year the debt is where we should be looking and thats where youre going to find the winners and the losers josh, i see you shaking your head. Ive got to say thats where the opportunity is both on the short and the long side. Take a look at sears, i think you just mentioned it. Oneyear debt for sears now trades at 17 . If would trade a heck of a lot higher if you didnt have Eddie Lampert lending more and more money there. You can find other portions of the debt market where there are clear winners. But the key element here is that the brick and Mortar Retail industry is still too large. I totally disagree with you toys r us excuse me, now let me talk. Im shaking my head because we just walked two weeks ago toys r us bonds completely complacent thats a very unique situation. With all due respect with all due respect, the bond market is the Corporate Bond market is asleep. The spread between the spread between treasuries and Corporate Bonds right now makes no sense outside of the context of global Central Banks supporting credits that quite frankly should not be trading where they are, certainly should not be as tight as they are. And im going to tell you something. It is not so simple as, oh, they just have to invest in digital, theyll be fine. Macys is the poster child for a company pouring its heart and soul into digital and it didnt help the stock is down by twothirds, has lost more than half of the companys value in like 18 months the xrt, the retail space, is giving you no reason to look at it at all. Down 5 week to date. Scott, scott, it double topped 2014. Its been in a down trend for three years. I dont understand why people are bludgeoning themselves with these names. None of them are showing any intention to get off the mat i think there are going to be a whole hell of a lot less companies. Thats my point. Why would you want to invest in this phase of that . Look, its arguable you can say that its early, but you also know that the xrt rallies in november. You know that. It rallies into black friday im going to try to make 4 what if i asked you what if i flipped that and said maybe its not early you could make the argument that its too late in many respects to get out of some of these names without just taking serious pain. I think you could make that point. And joe actually made that with tax loss selling which unfortunately for this group will pile on here. By the way, i looked at your favorite stock in this space what that be . J. C. Penny is under 4 today. At ten bucks you were saying j. C. Penney is fine. First off, lets make this a little bigger. Everybody has a portfolio. I have a toehold in retail this is 3 of my portfolio im have a fabulous year we talked about other stocks on this show that are doing well. Were happy for you why the hell then are you Still Holding this stock because frankly i think its undervalued. I think its one of the ones thats going to be a survivor here look, i look at the debt i told you oneyear sears debt is 17 threeyear debt for j. C. Penney is 6. 6 . Josh, you make the argument and ill grant you this is a discussion to be had, that the bond market might be asleep. I dont think you can draw that conclusion from one data point being toys r us. What did the bond market tell you about j. C. Penney a year ago, two years ago im not saying youre not going to make money with the stock how can we say that thats a useful signal given how asleep this market has been to all of these retail names until the very last minute the discussion that most of us are having on this space is one of are there bankruptcies coming this is clearly a speculative ill help you yes. This is a speculative space and youve got to Pay Attention to the bond market. When we had matt boss on the other day from jpmorgan who was once again named the number one analyst in the space, heres what he said about the very issue that were discussing now. There will be continued disruption, continued store closures and continued bankruptcy thats where on the off price side, i think theyre the biggest beneficiaries over the next couple years. So this guy as well yeah. A very well respected voice in the space says there is going to be more bankruptcies. I dont think any of us are denying that what im saying is you can start to weed out the winners from the losers by looking in the debt market thats really what ive been saying this whole time. Ill tell you another thing i think these people sitting in the Shopping Mall are sniffing glue if they think, oh, its a great yield. These malls are literally propping up stores themselves in order to not have empty space at this point you take a look at what went on with the bankruptcy of aeropastle you now have 500 stores or whatever being operated by the mall owners who formed a consortium and went in and said we will run these stores so i dont know if you like having your clothing designed by a reet but thats whats going on this is a mall store, the stock is down 50 today. We talked about that when it initially came out and all of us collectively said thats a name you want to avoid. But thats not a j. Jill story. Its part of whats happening inside the mall. Its part of a bigger story but youre talking about a company thats relatively new and interesting a category space that right now really as everyone is saying needs consolidation, not new stores. So i think look, look at the generals of what retail were, the apparel names. Look at l. Brands. These were the names that two or three years ago we were all talking about. Two or three years ago . Youve been talking about l. Brands this year this year. Ive been talking about it. I havent owned it and i like the company. This is a company i like you asked matt boss yes. A question about it. I like the catalogs the. You do have a good memory selectively. Scott showed up today to beat us all up. I didnt say i bought it, i said i would like to buy it. I would like to see the turnaround story. What im saying is its evidence of the entire Retail Sector right now, to joshs point and petes point and maybe a little bit to jimmys point, i just think youre looking at a scenario where such massive contraction is needed and you could use the term apocalyptic and i do think its going to hit the debt market. Lets bring another voice into the conversation. Dana telsey joins us live from new york city. Dana, its good to see you again. Thank you for having me nice to see you. I dont know how to sugar coat this conversation, i really dont. If you look at the way these stocks are trading, im looking at your coverage list. Im just going to ask you straight up, dillards is a hold the target is 55, the stock is trading at 51. J. C. Penney is a hold. The target is 5, the stock is under 3. 40. Macys is a hold at 25 the stock is trading at 20 nordstrom is a hold at 50. The stock is trading at 42 why . I think overall when i look at some of these names out there, i heard the dialogue that you were all talking about before i agree, were going to see more contraction. The areas of weakness of Department Stores and apparel, its not all retail thats weak, its those particular areas. When i think about the names, we came through a Second Quarter where these stocks had a rally and then all of a sudden we have a ton of negative news that are coming out these stocks are underowned and so theyre getting hurt more on the downside now but were going to continue to see transformative change in the group. And i agree, it is not over yet. I know. But why arent these sells why arent you telling people to run for the hills . Get out of these names and get into other areas that you like some of the interesting things with these names, the Balance Sheets of some of these companies happen to be very good i think when you look at the samestore sales, the expectations are so low right now that any little pop like what you saw out of the Second Quarter, these stocks dont just straight in 3 increments, they trade much higher than that. Theres also more change that can be coming. You know about the nordstrom go private transaction and yes, we know it hasnt happened yet but theres potentially more of that that could happen. Something like dillards has been buying in stock for years theres more to do look at kohls whos continuing to buy in stock. Dana, when you think about i was talking about mall traffic before and justthe fact that so lets take the malls that would be owned by Simon Property group. They quadruple the amount of space for restaurants and food they revamp the movie theaters theyre trying to draw people in with things that are not just, hey, we have a gap and a banana republic, which sounds great and i think to some extent it works. However, youre pulling dollars away that would be used for apparel, that would be used in a Department Store into the revamped food court or into the ninth restaurant they have opened up. So, yeah, you could boost mall traffic, but it has not helped these companies that are on your list what will help what can they do at this point i think some of the things in the Department Stores overall, if you look at the Department Stores in europe, theyre more than just apparel. And whats happened is that women used to buy apparel for four reasons work, weekend, gym and party and today you only have two reaches to buy apparel given the more casual society that were in its about work, weekend and gym as one collective and then party. So whether its putting in restaurants or putting in other categories, whether its hard goods like consumer electronics, whether its gym equipment, you name it, but its got to be other things than just apparel and you know, we may see the shrinkage of some of these Department Store boxes also and fewer Department Stores in each center maybe one or two instead of four and i think thats the future. Dana, weve heard one of our investors on the show today make the case that if you look at the debt market, it perhaps tells a better story than what the equity market is telling you about some of these names. Do you buy that argument i think you have to look name by name. I dont think you can say its Broad Strokes because i even think some of the names that have been debtladen, theres concerns about them. Look at the concerns about neem an ma neiman marcus. Lets go macys what about the debttoequity story there . I think overall on macys, its going to continue to be a little bit of a real estate story today. The benefits and changes that they have happening. But new loyalty and marketing program, thats a third and Fourth Quarter thing to see. Certainly the valuation is cheap relative to the level of sales that they have i think their debt is okay what about j. C. Penney . Were trying to help jim and save him from the apocalypse is there time . Is this an intervention i think there may be a little bit of time but its very narrow you need to see that gross margin improve. Thats true. You need to see that gross margin up. Can they do that . Lets see the third and the Fourth Quarter its a work in progress. Were having coming out the Third Quarter so far, its a hitandmiss Third Quarter. What happens if suppliers stop shipping them product, dana i havent heard anything like that yet. Its not going to happen. Its a good question to ask because thats where the death spiral starts. Were not there youre just not there. No. Dana, let me ask you something. Management at j. C. Penney, i see whats going on there and to joshs point about experiences, theyre moving out the salon style, the sephora, all of these things and getting no credit for it do you lay that at managements feet i think overall they also put in appliances. I think they probably thought that there wouldnt be as many sears stores now so they can get those shares i think having sephora is a big benefit to j. C. Penney if they didnt, wed be seeing sales per square foot that were a lot lower. Dana, appreciate you coming on we always appreciate your candor. Thank you for having me. Lets turn to the banks quickly. Citigroup, the shares lower despite the beat jpmorgan down early on jpmorgan and it rallied back up and was in positive territory citi hid new highs when you look across what their beats were, scott, they were yearoveryear beats they continue to show us that they are able to navigate a very difficult market, because we know how tough trading is. We look at the bond world and all of that has been very difficult but they made up for it on other ends, whether youre talking about jpmorgan or citi, they were very, very similar in terms of what their quarter looked like. If we see any change in this volatility that has been extremely low, weve only had two closes above 10 in the volatility index so far in october. I mean the volatility is gone. Volumes are very, very light, so that combination from the trading perspective is exactly what hurt these and i think people are taking profits today. I dont think necessarily people are coming in saying, oh, these are a sell i think guys are taking money off the table and thats going to create an opportunity. I asked you yesterday how high the bar had to be for this to not happen. Yeah. Did these, even though they were pretty good they were more than pretty good. Did they meet those expectations they meet, beat and absolutely were excellent. I think because of the 10 run end of this, there were some that said im going to take my chips off the tail this is a pause for the financials. Citi was talked about sort of the best in class. The stock has done the best in big banks this year. I think theres a little bit of short termism here and i think it relates to the trading book everyone is focusing on the fact that the bond trading for citi was so poor. I think were completely ignoring what some really relevant, positive fundamentals offer this everyone keeps talking about selling regional banks good luck selling regional banks when you see the commercial loans look as strong as they did. The retail bank is better than the Investment Bank right now. Net interest margins were the highest they were since 2013 at 2. 37 so the true fundamental story of what a bank should be is evident. This is really, as pete is point out, about trading and good luck predicting when volumes and volatility will rise once again. Lets remember, these banks dont participate proprietarily in the trading as they did ten years ago. Theyre much smaller. Is citi best in show . No, jpmorgan is. But citi has more upside. Citi was trading at the Biggest Discount to tangible book value jpmorgan probably is the biggest premium. I think that premium has been worth paying for investors thats why i stay in that name i think if we do get into some kind of a storm in coming years, which would be likely, just economically i always feel like jpmorgan is going to be the one that weather it best so i prefer that and i would call that best in class. Being long bank in america, i think this buffers any kind of blow that they may receive when their earnings come out. Okay, we know trading is going to stink. Just keep an eye out for credit card losses its not that these banks are underwriting poorly, but the number of frauds that are going up is really quite prolific. Take a look at credit card reserves as you go forward. Morgan brennan has a market flash for us. Lets talk about o. J. Right now. The usda releasing its first report on the florida citrus production, estimates for the 20172018 season this is the first report since Hurricane Irma swept through the state of florida and did extensive damage to the citrus crop last month. The florida orange crop will be the smallest since 1947. Huge losses. This of course due to that Hurricane Irma, as i mentioned, but floridas Agriculture Department just earlier this week had estimated the yield would actually be even lower the lowest since 1942. So presumably this forecast, really rough not quite as bad as anticipated and that is the reason the november contract for