Behemoth consolidates a space under going massive upheaval it started with smaub cutting commissions to zero. Sparking a flurry of headlines over the frantic race to the many bottom. With the news of the deals between the two giants mass the race to zero become a sprint for survival guy. I dont know. Hello, mel. Hello. I dont know if its a race to zero or sprint to survival. Its genius by schwab. Dan nathan alluded to it a few weeks ago. Schwab was genius, cut rates to zero watched the keters go to zero in terms of stock td amerd trade went from 50 to 32 in a straight line. And then making this announcement they are probably buying the stock or company at levels they wouldnt have been able to buy them a month or so ago good for them. This makes schwab a huge forepersons in the business. And the play. They are a force. Even more so now. En and quickly i think people say etrade next to go not so fast. There is room on the downside. The Second Derivative play, Morgan Stanley, for example, i think you see in my opinion injury you see advisers sort of flee the wire houses more so than they have and go to names like this to hang the shingle, do their thing, get paid more, own their business i think this could be really negative for Morgan Stanley. It wasnt today. It could be. What is Charles Schwab buying what would they be buying. Matt levin at bloomberg he had a good piece out saying schwab broke ameritrade to buy it if you think about it you went through what was the loss revenue Going Forward from commissions . I think, you know, 7 of schwabs revenues were commissions versus 36 for amerd trade. Really what they are trying to do is aggregate assets but they want the trader thing. Because they are going to cross sell and get new revenues from the asset bases. I guess the biggest thing i would say is these are commodity advertised utilities when you see the pricing of services go down and there is not a lot of daveiation. Ill tell you i know the guys at amerd trade. Nef good tools they have good stuff when you put it together i think youre going to find probably better education, better tools and then they figure out how to cross sell a lot of things. What did they buy they bought a brand. Come on, they bought a sticky brand. The two names together, 80 billion in market cap. 5 trillion we said at the top of the show and no one is close. Think about the stickiness of the asset base guy brings up the dynamics in the raa and Investment Management business. But the people with the companies probably have been there a long time. People dont really switch so the fact that theyve gotten that big of a hit start on everybody else and essentially as we talked about put the competition out of the game. Look if you listened to td calls over the last year you heard frustration from Analyst Community whatever executing all day long where is the growth coming from . Where is the growth coming from . Lets pennsylvania face it this was the question. The had m and a question was the the question everyone was asked. They expected etrade but look at this. I think its brilliant. It was only september 30th schwab did this. So the target has lost more in market cap i mean they were able to buy it its only seven weeks later. This had to have been started before today, the discussions. They seem to be far along. That has to be a couple of woke process. Think about how quickly they went out and did this. Crushed everyones business and then are seemingly able to buy a big swath of assets. I mean thats pretty impressive. Now obviously its a land debra debra are grab what do you do in . You are left, interactive breaker etrade. You have to be scrambling because its only getting harder its already hard enough as opposed to to september 30. Is it even possible for a Morgan Stanley or a Goldman Sachs to buy one of these platforms . From a regulatory perspective zbleen absolutely from a regulatory perspective zbliets possible. You know what is so funny thats such a 199 question if fast money existed in 1999 thats the questions they would ask. Were partying like 80s 19920 years later. Its interesting to think of the evolution. They were massive disrupters in the 90s. Schwab schwab was a zwrupter in the 70s. I think the only path forward is really consolidates amongst what we called the discounters and now we call them online. Disrupters getting disrupted themselves robin hood came out and you have platforms saying. Free. Were taking this out to they were disrupted and jumped ahead and now they skated where the public was going and here we are today. Nobody even close. One last thing about antitrust the customer is paying zero for a lot of things. Maybe the administration would have some problem. I doubt it. Market share is at issue. I dont know. But whats interesting when you think about the combined revenues of the companies its like 16 billion guy mentioned Morgan Stanley abwith company with a similar market cap to the combined entities and 40 billion in sales. Its more diversified. You could see an Investment Bank buy Something Like that. It would be a smaller percentage of their whole it makes it more competitive in a way. If you see six Online Brokers go to three thats not great. Thats when regulators get their antennae up. Think about in the wireless space when they wouldnt allow three and four to merge you in duopoly, verizon appear and at t schwab was genius for a a number of reasons not least of of which only 7 or 8 of the revenues were drive. By commissions where e trades and some other places from 15 to 30 . They can say we can afford to go to zero. But now look at schwab the stock and say does it make sense at the levels stock rallied today. But trades close to 20 times next years earning was no significant eps growth its taking time to make it happen my inclination is if you chase schwab here you are trading wrong. And here is the other thing about that chart that kmart is a function of a 10year bull market. On some level think about the market theyve been in think about the low Interest Rate environment. The 5 trillion in combined assets is something to do with home equity loans and rochlg credit thats huge margin business that they offer thats great for them. If you think and concerned about the cyclicality of in type of business where we are in the market cycle, thats another reason to be cautious. Kind of what guy is talking about. Does the deal make them better suited for thedown turn to come. It makes them better suited for a market connecteddown turn. But we talked about the consumer guy talks about how levered they are. Penchant and wouldnt for spending thats the story is the u. S. Consumer levered and there is no question that theyre baieroing money from the banks who i dont think are giving it away and they have collateral at he is these places. But thats part of the core business. I think time is right, the correlation with the market, right, is clearly there. But also, i mean if rates move higher its really good. Well, hold on, they took out the number one competitor how Many Industries do you see that happen and then when you think about how leveraged in technology they are and how much cost they take out . No matter what the market does two years out, three years out this is a home run for the fact that theyre not competing on the marketing front. These guys spend hundreds of. It can trade down if the market is down. Of course. Right. Were fl agreement. Listen to you. Very dismissive sounding. No, no, no. Thats as good as it gets fours. I think thats really impossible lets play karnak. I like that game putting the card up and say. The next the next combination in this space will be. Oh, wow. I think at a certain point etrade goes i dont know if Goldman Sachs going to gobble up etrade will go but there is going to be pain for the next couple of months its going to be painful for etrade they are letting that one die on the vine and somebody will come in and gobble it up. But if i had to guess, etrade goes, march of next year how is that . Like that. You want to play karnak. Is he allowed back. Im back. Im back you might not see me until the c block. But i think its robinhood tim. It could be aic at a operative. I think youre also talking about there could be private equity mona sees a lot of value in etrade etraed is not going away tomorrow be clear. Lets talk about the pole position how about a money center bank. Yeah. That business is most aligned. That makes sense. You need to scale in private equity and reduction of cost it has to be somebody giant that would make sense. Private equity is also great at taking businesses private that are in structurally difficult times. And finding and finding the valuable assets, selling off pieces the total playbook. Asking you guys as shareholders, ifcy citigroup or bank of america one of those two lets say said tomorrow were buying etrade would you be happy. For the right price i would be i think, again, the businesses are complementary. And citi and bank of america have booming, driving Wealth Management raa businesses that this makes sense but the infrastructure, the pipes everything they have makes a lot of sense. Karen. I agree i think its a chance for them to reduce costs and run more efficiently i would. Interesting all right coming up. Dont ask dan. Dan is out. He played karnak already. Stock finishing in the red and one tough technician has two names amid the pullback shelter. Former ceo allen quest trom giving the retail round up and the winners and losers of the retail space much more fast money right after this as a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. It is nice. His haircut is nice. This is the mostawarded minivan three years in a row. The van just talked. Sales guy, give em the employee price, then gimme your foot. Handsfree sliding doors, stow n go seats. Can your car do this . Man, yall getting a hook up and yall dont even work here. Dont act like im not doing yall a favor. Yall should be singing my praises. Pacificaaaaa with employee pricing, get 4,107 below msrp plus 1,000 bonus cash plus 0 financing for 60 months on the 2020 Pacifica Limited what are you doing back there, junior . Since were obviously lost, im rescheduling my Xfinity Customer Service appointment. Ah, relax. I got this. Which gps are you using anyway . A Little Something called instinct. Been using it for years. Yeah, thats what im afraid of. He knows exactly where were going. My whole body is a compass. Oh boy. The my account app makes todays Xfinity Customer Service simple, easy, awesome. Not my thing. Well back to fast money, the record rally taking a breather this woke with the dow and s p 500 falling hard the third day. If you think this is the beginning of a pullback the guest guest says he has ideas where to take cover. Thanks, melissa lets look at the shortterm pretty much every Technical Analyst on the streets has been worried about the shortterm peak developing. Here is the market coming off a little bit a lot of sport down in the 33025 ray range. We have been bullish on the market all year. And we are the playbook in 2019 where we get the momentum peaks here and here and here and now here, is unlikely to give us the same sort of pullbacks we saw through the bulk of 2019 why is that . If you look at the longer term chart we think the playbook changed. We used this chart a number of times before but whats important is the longterm s p in the top panel, the 200 week moving average, tracking the fouryear average for the market and such a good barometer for the longterm expert we saw if had it 2011, 2016 and 2018 as well. Coming out of the trading range were in the market cycle and in the secondup leg not many people follow this but its a coppic curve. We found it good over the years to track into the cycle lows there was one back in 20112011 and 12 and down in 16 this should carries to us 2021, 22 they we think there is upside for equities in general. However a lot of people are concerned. Caterpillar is not defensive by any means. But we think we are not seeing that much pullback thedown trend has been broken. You get the pullback in fact interesting today when the market was down cyclical were up, banks up. And yields were up we still think there is more upside in the cyclical names maybe a little volatile but still going higher the relative performance trend in place two years is reversed similar to what we saw in 2016 so if you are concerned about the market i can understand not wanting to buy caterpillar our view is it goes higher well into the First Quarter you want a defensive name, j j is well suited the 200 week moving average its sitting on it. For reference if you think about nike in 2017 thats the exact spot before it took off and thats exactly where disney was in 2008 hovering around the 200week moving average getting ready to go. Sure its weak hasnt had a lot of portauprince but thats what nike and disney looked like over the last couple of years defensive name id stick with Johnson Johnson. Rob sommer come over. Bring the chair over as he so aptly does. Remember will hit his head. Got stapled. He got those removed. So he is all redhead. He is not a redhead. Neither here nor there. I understand youre a Technical Strategist but when you prept these ideas to clients, whats the reaction . I would think that that you get a lot of pushback. On the cyclicals . So. On Johnson Johnson and kaerlt pilar caterpillar for one is in the cross hairs of china trade war. 00 . The Johnson Johnson has the litigation risk. Weve been bullish and cyclicals through the year i think we got the semi call fairly well throughout the year. The turn in the cyclicals looks longterm to us through at least 2020 we see with jp morgan breaking out of trading range no one wants own deep value or cyclicals. And i tell you if you look at the charts they look convincing from a longterm standpoint. I can understand a bit of volatility into the year end around some of the names that run. Cat is up 26 off the november, october lows on j. And j. Push. Thats great we want to hear people dont like the names thats how people get back into the stock. Are you saying lets talk about if something goes wrong with china trade, that the cyclicals have a different risk reward built into at the prices than the market on whole. I think we have to make the assumption its an assumption. It could be. It trade goes bad, these sticks will be hit with you, again, if you step back a lot of the stocks have been under pressure two years. When while trade is part of the issue i think a lot of is the economy. And the backdrop talking to top lee on the fund saturate on the fundamental side the ism look like they are about to bottom. Its more about the economy than the trade deal yes there is volatility but i dont think theyre going down that much. Seems like the same part of the trade would be germany and trade economies. Yes imt bm. Would be a fedex. Do the charts feel similar. Fedex is a bit different animal but generally across the industrials and transports, banks its the same profile. One to two years down to the longterm secular uptrend which i think is important germany is similar em looks the same. And part of that trade is i think the dollar is peaking longer term. Thats going to be a controversial call but i think thats whats happening i think its going to be a big tailwind for cyclicals. Rob of fund saturate. Would you rather on this end of the desk. Not cater cater pearl epilar. You go back to the Third Quarter october 23rd missed on eps, missed renew then the Prior Guidance which you could drive one of their tractors through. Oh. Its trau 1175 to 1275 was guidance ratcheted that down now you have negative eps growth and trades at too big a valuation i understand if you think some magical china deal is happening and all of a sudden every rig in the country mass a caterpillar labor neck to it yopdio i dont see that. Im not playing your game. What. He is calling for a little pullback let me tell you this, the december 31st quarterly spy. The eps trashing the s p 500 the at the money put is less than 5 the s p up 24 if you thought you wanted protection between now and the he said of the year it costs you 1. 5 thats stounding it tells you a level of complacency i think youre going to be back towards the 300 level or 3,000 in the. Im not sure going to get it. I think you get a shallow consolidates. And i brought him back. Dan is so in trouble. See you guy in the f block. We should take your chair out. Take robert all day long. Thanks for that rob head over to the website cnbc. Com here is what else we have coming up on fast. Retail at the forefront again today. With earnings from gap and nordstrom. We dive into the numbers and look for the winners and losers in the space. And then we explore the universe of under the Radar Software companies to find out how the Options Market is betting on ve. Va systems those stories and more when those stories and more when fast money returnslky hair, gn and healthy nail natures bounty, because youre better off healthy. Wow giving one. How did you guys. . Dont ask. The lexus december to rembember sales event get 0 percent apr for 60 months on all 2019 models. Experience amazing at your lexus dealer. 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. 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