We start off with a major reversal on wall street. S p 500 gave up gains around 2 00 p. M. To finish close to session lows same for tech stocks you saw the same thing play out in facebook and netflix, both stocks starting strong, finishing around session lows. You can extend this to regional banks, health care, energy, small caps what does the action today tell you, guy adami its not encouraging. Im not going to make a deal out of today yesterday we had the show of hands. I dont think any of us were convinced by the rally ill continue to say a 30 vix suggests were going to see days of 1. 52 moves. I happen to think on aggregate its going to be lower im not trying to be all good morning and gloom, but the environment we find ourselves in in terms of a lot of Different Things as we head into the fall, on top of which an election is probably a coin flip, i dont think its particularly bullish for the Broader Market and especially on the back of a rally thats been historic karen i did raise my hand yesterday, just to clarify i do think all the things that caused this rally are still there, maybe other kinds of stocks rally, some of those parabolic ones will probably be left out to me, i think it was the skinny package that failed that sort of the kacatalyst for the selloff im long facebook. I amlo long apple, long alphabet i thought actually the banks hung in there pretty well for a down day i look to buy some fedex but it really didnt move very much id like to buy some of that thi im still optimistic that that selloff was very much about taking the froth out of some of the huge nasdaq players and not the end of a bull market. Dan i didnt know guy had a cat i know he has dogs because they bark through our show every day. Listen, i think whats really interested and i shouldnt come as a huge surprise that what led on the downside today and the last few days were the very things that were defying gravity on the way up. Theyre heavy. They work off a lot of excess. Id keep a close eye on apple in particular i think the panic low on tuesday was about 111. You dont really want to see that break there the s p 500, the qqq, the nasdaq 100 closed just above those lows from the other day we dont want to see them round trip and make new lows mel, you mentioned the small caps the russell 2000 has underperformed the entire way. Its still down about 10 on the year that has materially broken its up trend from the march lows you talk about the stimulus, skinny, fat, the front end loaded all this fiscal stimulus and we dont have another package here we have structurally high unemployment its still well above 10 . I think the russell 2000 is a bit more reflective of whats going on on main street. We may not have a stimulus package, but we have a fed could it be jay powell once again to the rescue . My hand raising yesterday was a halfway. Karen talked about the fed she also said frothy if youre taking a sip from that frothy mug right now, you have a little bit of a froth mustache i think you can pull back more if you look at levels from june 26th which is when a lot of these mega cap stocks and names like square and paypal and nvidia ran crazy, i think those are levels that look reasonable to come back to. Youre playing the nasdaq 100 or triple qs, no ones going to be able to ring that bell you have to find levels in the market where a lot of these stocks are holding some ground here nothing has changed. Today we had some jobless claims number which still tells you the pain thats in the labor market. I think we have inflation. At some point thats going to be destructive for fixed incomes. We had to pull back. You layer on china, layer on elections, layer on a 30 vix or maybe thats why we have a 30 vix and thats where were going to be. Lets talk financials here. We got some big news out of one of the biggest banks citi announcing that jane fraser will take over the move athletes a lecompletesp shakeup. Citi is down 36 this year alone. Lets talk about this with mike mayo mike, your thoughts . Should we expect any real departures in terms of strategy given that shes worked so closely with the ceo and the cfo . I hope we see changes with jane fraser as the new ceo of citigroup. When you look at the eightyear record of citis ceo, you look at the stock price citis stock price is up onethird, the bank index is up onehalf and the Broader Market has more than doubled. Citigroup today has worst in class efficiency, returns and stock marketvaluation. The current ceo has done an excellent job to improve the resiliency of citigroup to a point where its stronger than its been in decades but when it comes to strategy, i think the current or exiting ceo has played it too safe i hope jane fraser takes a fresh look at the business mix, takes more aggressive actions. As you know, ive been on your show and ive also gone to many annual meetings of citigroup and said why dont you sell off mexico, why dont you sell off the consumer businesses in asia, why dont you act more aggressive and the biggest mistake made by citys current ceo is when he said a few years ago, our restructuring is over. I hope we have a fresh look and theres more restructuring to b done how can we restructure citigroup to improve profitability not just for the next year but for the next decade. Make, its karen. Let me ask you about citigroup but its more broad than that. Provisions for this coming quarter, how do you think these banks are set up going into what will probably be very, very elevated loan losses for citigroup and the banking industry, these are sobering times. You are seeing unemployment stay high youre seeing bankruptcies these are tough times. Lets make a distinction between costs for bad loans and the bad loanlosses themselves. That distinction is a subtle but huge distinction in the Second Quarter and the first quarter, banks took enormous losses for future loan loss they reserved for future loan losses so the reserving for future loan losses probably peaked in the Second Quarter those costs are likely to come down at the same time, you should see the actual losses go higher over the next several quarters, but not too much yet given the degree of Government Intervention and forbearancforb. We think that the provisioning was so much in the first half of the year that earnings for the big banks hit a low point in the Second Quarter that should be the lowest point that youll see through the course of this pandemic. I think thats important mike, why most of the other banks are at least trading around tangible book, what is citis problem, in your opinion . Well, their efficiency is sub par, their returns are sub par and theyve not been aggressive enough with restructuring their business mix even if you thought the current ceo had done a fine job, at the end of the day the stock market doesnt lie and youre absolutely right, youre trading at. 7 times tangible book value. That implies a huge hole in the balance sheet, which is not the case, in our view. Its not like the Global Financial crisis when they had, you know, 50 billion of bad mortgage related assets that needed marking down. You dont have that situation. To us, this is an opportunity. Having said that, you lack a catalyst because you dont see enough aggressive restructuring. You have the business in asia and mexico and the u. S when it comes to wholesale banking, wholesale banking is Global Retail banking is local by country. Thats a failed vision of the last 100, 50, 20, 10 and couple years at citigroup this idea that citigroup was going to serve that Global Traveler and service all their banking needs, that you have a customer in hong kong who sends their kids to boarding school in london and they ski in aspen and theyre going to be your super wealthy customer thats been a fail eed experime over any time frame. Thats why we called for more restructuring. The concern with the stock trading so far below tangible book, is a concern can they generate concerns above the cost of capital which is a function of their business max, which ix mike, thank you tim seymour, do you like citi more, less, or the same . Love the social change here i love the fact that citibanks board is going to be 50 50 gender male female this is a move that should not be seen as extraordinary, but it is it will be great when this is common place im long citibank, im long jp morgan, im long bank of america. I think the drivers today for citibank longer term are where theyre going to extract the most value it does seem that their commercial bank is infrastructure heavy theres probably a lot of focus on Global Infrastructure for ms. Fraser Going Forward i think the banks have thrown enormous provision for the last two quarters and looking for better times ahead but im waiting for that catalyst even before covid19, banks were underperforming and they were underperforming even before they had this headwind. This might be more common place, at least on wall street, karen. Jp morgan has pretty much te telegraphed that the successor to jamie diamond will most likely be a woman. I hope it is more common place. Jp morgan has set up a horse race between the current cfo and marianne lake, who is the prior cfo and now head of consumer lending. Both of them will have outward facing experience and operating experience theyre both very young. Ones 50 i think marianne lake is 51. When those rolling five years that jamie diamond says hell retire in five years, when one of those actually is the fiveyear period, it will be one of those two and i think theyre both stwrooextraordinarily taled for fraser, thats great its not a complete shock. Maybe the timing was surprising. I hope, as tim said, this is common place at some point were still awaiting a response from nikola founder Trevor Milton to a scathing short seller report that sent shares tumbling 11 today. It goes on to say that gm, which Just Announced an 11 investment in nikola didnt do its Due Diligence before making the deal, gm telling cnbc we are fully confident in the value we will create by working together. Nikola did fire back today to call the report a hit job, saying cowards run, leaders stay and fight for integrity. Troll on it was a 90page report so maybe its taking longer for trevor to come up with a response here the First Response is we know and hindenburg did disclose a short position in nikola its a tough one. I think if you look back at elon musks history he face add ld af criticism. He took on the shorts and he won. He even has a gym short line on the tesla. Com website to show for it i dont love to see founders, ceos get in wars with shorts its a bad look and its distracting from the business. That being said, the fact that this stock went up 40 on that gm news earlier in the week was pretty astounding. It was obviously a pretty impressive investment. But youve had two instances where investors had the opportunity to really do the Due Diligence here so to me, i suspect its probably more the same i doubt theres fraud there. Id be surprised. Guy well, to answer your question to dan, there is no difference at all you can do thoughtful work on the bull side and the bear side. The only real difference is, as many people have learned the hard way, its a lot more difficult to make money on the short side with that said, and obviously i have no idea the veracity or the truth, gm had better hope they did all their homework and crossed their ts and dotted their is on this one, because if they didnt and there is some truth in this report, the 2 billion investment will have an exponential negative factor in terms of what it means for gm Going Forward, in my opinion, again, having no idea the truth or veracity of the report. But if im at gm right now, i am absolutely burning the candle at both ends to make sure i did my homework. Tim one of the differences is theyre alleging fraud its one thing to say that a company isnt worth the valuation. We had Trevor Milton on. I think the term Business Plan not business has been used theres a lot of allegations including nepotism at the country or theres no Real Technology there, but its very different than alleging fraud. I have zero position in nikola ultimately short reports like th this that are sensational are ones investors have to Pay Attention to as well its to point out thr certainer certainly opportunities that people will get out there. Theres a difference between fraud and an expensive valuation for the company. Coming up, the mother of all bubbles. That is what one of our traders is calling a key part of the economy. Plus, were following the after hours action of oracle and peloton. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Welcome back to fast money. Weve got earnings alerts on peloton and oracle lets kick things off with josh lipton i caught up with kirk who covers oracle. He called them solid results key questions on the call, qq guidance which we just got more kpcompetitive position in h growth market. Of course, another big question is oracles interest in tiktok u. S. Operations. Kirk has previously written about that says it could make sense if oracle sees them as a partner. Infrastructure businesses are also growing rapidly as revenue from zoom more than doubled from q 4 last year to this year i have a high level of confidence that our revenue will accelerate as we move on past covid19 she says eps growing between 1014 revenue growing between 13 she says the company will make no comments about press reports about tiktok if youre waiting for news about that, doesnt sound like were going to get it on the call. Dan, whats your take on the quarter . Good quarter. That cloud license beat was big. The problem with the company is theres knob revenue growth. Wh when you look at salesforce and the stock rallied 24 the next day, youre not going to get that at oracle its a value play for a reason i do like it here. I think you could play for a breakout market here in a better market if they do happen to get tiktok for some reason, i think that would be a great asset for them to own this quarter looked okay i would not be selling it right here i think its accept up pretty nicely in a better market to break out above 60. Total blowout fiscal q4 earnings from peloton, which seems like the stayathome brand to beat. The Company Reported its first quarterly profit since going public eps came in at twice expectat n expectatio expectations connected fitness subscriptions up 113 , paid digital subscriptions up 210 . Take a look at how peloton has benefitted from the new stayathome life were all in its said to expect 880,000 connected fitness subscribers for the kwhoewhole year they ended up with a million the only downer in this report is they said you could expect longer wait times for the bikes for at least another two quarters the average users workouts per month in fiscal q4 were twice what they were in fiscal q2 im curious about that number i saw on twitter rich greenfield said this is per household as opposed to per user. What is the distinction . Its the number of users in your household i know a lot of people who maybe there was one user and when the pandemic started they got a whole other set of shoes i think its also per individual user as well that metric was way off. Lets trade this one, karen its amazing peloton absolutely delivered on this one. It is amazing when you consider how high the expectations were. Just a couple of days ago two giant upgrades to 110. So to be able to deliver on that and beat by such a wide margin is pretty impressive i thought that 24. 7 million metric of monthly use was interesting as well. We dont know exactly with who used it how many times but also the churn was really good, less than 1 per month churn. Well see how that involves as gyms open or as economies reopen i dont own it its just too expensive for me, but outstanding quarter. In terms of a metric of user engagement, i wonder why investors arent demanding to know the average minutes per subscription per month as opposed to the average workouts per month. If you really want to know how engaged your user base is, it would be how many minutes you are engaged with that actual product. Guy . You take a five minute arm class. Or a 90 minute power zone endurance and its all the same. Its one workout. Thats fair i guess if you really wanted to break it down, ill push back and say i dont know how important that metric is the fact that people are on the bike, people want the new bike, people like dan have the treadmill. Weve said for a long time its not just a hardware company. I totally get what karen is saying in terms of valuation, but i think the stock continues to grind higher from here. Tim even more impressive when you consider they talked about a fallen gross margin because of price deductions vertically sbe desperatintegrat. Coming up, luxurious litigation well tell you about a new twist in the deal drama between lvmh and tiffany. As business moves forward, were all changing the way things get done. Like how we redefine collaboration. How we come up with new ways to serve our customers. And deliver our products. But no matter how things change, one thing never will. You can rely on the people and the network of at t. To help keep your business connected. We get a key piece of housing data tomorrow. We get Weekly Mortgage bailouts tomorrow before the bell check out the stats. Mortgage rates are at record lows new home sales are at the highest levels since before the financial crisis housing surged for a Third Straight month and home prices continue to soar one of our traders says the Housing Market is on shaky ground in fact, he is calling it the mother of all housing bubbles. Tim . I am that trader. Its not on shaky ground right now but the mother of all housing bubbles is upon us because were at the mother of all bubbles. Rates are at zero. Before the housing crisis rates were not at zero they were significantly off bear highs. If you think about the exodus out of urban centers and where people are buying homes and the fact there are a lo