For u. S. Steel teslas awful august rolls on and the casino stocks crapping out, after a monster heater. Im melissa lee, this is fast money, live from the Nasdaq Market site. And we start off with a surprising reaction to a pretty disappointing earnings report. Shares of target rising nearly 9 immediately after posting q2 results. The stock closing off those highs, but still up nearly 3 on the day. The move despite some big negatives in the numbers the company reporting its biggest revenue drop in seven years. First samestore sales decline in six it slashed fullyear revenue and profit guidance. Still, even with todays gains, target is far underperforming its retail peers, down over 13 versus double digit gains for the likes of walmart, which reports tomorrow morning so, does targets warning raise a red flag for the entire consumer space or is this a targeted issue karen, what did you make of these numbers . I was surprised at the reaction we talked about this in the green room it wasnt terrible the best thing that target had going for it was the stock had really not performed well going into it, so, that was that, the bar was low. Things seemed better, but the, you know, the earnings were good, the guidance was not as good its not a crazy multiple, but the chacsm between walmart and target is gigantic now when i looked at it severalyearolds ago, maybe that could close they did seem optimistic july was better, that last quarter wasnt great, but it wasnt terrible and so it wasnt terrible. They are hopeful for back to school, all the way into september, they said, and i dont know if thats Bed Bath Beyond consumers that they can pick up, that would be good, because those are a little bit better margin items, so wasnt terrible. I guess the street was looking for terrible, and i was kind of surprised, to be honest, the way the stock traded if you think, all right, lets say they can make the midpoint of their guidance, it is, i dont know is 16, 17 in their multiple, which isnt terrible, but its not super, super cheap. I mean, its ten turns below walmart. Yes thats staggering is that why the stock was up that it was simply too cheap relief rally. Im sure steve and tim have views on this. I was surprised. If you told me, we played this game, what the numbers would be, this stocks going to open lower. It opened up 10 spent the rest of the day going lower what the market took, inventories were down 17 , so, theyre like, okay, final wly, theyre getting inventories this check. Thats a fine thing. But the product mix is still lousy. Valuation, yes you can make a case and say, im willing to wait it out and target will figure it out, but youve been able to say that for a long time. Yeah, i mean, you know, i did spx spx spx this morning, and i said, lets say you put the pride issues to the side, you know, and thats completely what should target be worth . And they said, oh, you know, maybe 18 times thats not far from where it is right now, i mean, three turns higher, tim, because of the mix. The mix is still overwhelmingly a very negative issue for target, going into this sort of economy. What do you think . But the mix will get better and sol, i agree, if you take it at face value with a market that doesnt price stuff in, then you say, targets a company i dont want to own. Weve known this about their merchandise and their product mix for the last three quarters, and the headlines. Softening sales trends decelerating discretionary so, you take a company that is 16 times, eight buck as share for next year, which is around consensus, which came down, by the way, today after they kind of tightened things up, and so, you have a very clean inventory position, you have margin, i think, tail wind, because of where youve lapped those fullyear margin headwinds from the inventory. Inventory shrink continues to be a problem, but really, what have you priced in with target . I own walmart, i dont own target walmarts been a great stock to own and its not cheap, and but i think you stay there i think you can start to own target here. Just one thing i want to add. Tjx home goods was a surprise beat you would hope that you would see some of that same home goods kind of, you know, higher margin stuff sell in target disappointing that it wasnt a little bit better mix. Steve, whats your take at this point, does the stock reaction show that maybe target just got too cheap and its time to take a look maybe the worse is behind it yeah, i mean, lets not forforget, we had had woke wars with target, that wont be as long lasting as many would have thought that would have been and then when you compare it to walmart, walmarts revenues, over 60 come from groceries target, its around 20 . So, you really cant compare the two. I would still stay with walmart, but it does really reflect the kitchen sink type element to it. Karen touched on it. You have back to school, then you have christmas so, theres reasons to be bullish on target, where it is right now. The stock has not been above its 50day in quite some time. Popped above it, now back below, but i think you can probably buy target here. Interesting, because Product Placement is such an important factor for these companies you have these things called impulse buy, and im glad that steve brought up back to school, because its pretty clear that tim is preparing for back to school as he has his thermos and lunchbox behind him. Well done. Look. I dont know how you folks are bringing your lunch to work, but i mean, if its not in your pacman lunchbox and thermos, i dont know what youre doing of course its back to school. And guy, i assume youre going with the charlie brown, possibly, lunchbox well, you know what are you doing . Im going strong brady bunch this year. I was hoping to find the Partridge Family i was not able to. Back tow, mel. They dont make those anymore and you probably cant find one, either back to school, that is karen, you know, another analyst said that back to school is a very, very good indicator, with how the rest of the year would go. Yes target mentioned the resumption, also, of student loan payments as being a headwind for the consumer, which i thought was we all know that, but its different when a ceo actually cites it. Right they want to be cautious as they should be, having theyve had a bit of a rough go there. I was surprised at the back to school comment, even lasting through september. And that would be good for them, though they need to get their mojo back a little bit getting the inventories in order was part of that, but its been a tough slog here. Yeah. How much is there a readthrough, tim, do you think, to walmart to other retailers or do you think that target is sandbagging a little bit on its guidance and the other issues are targetspecific . Target tends to be very conservative i think some of these issues are targetspecific, and i think it just gets back to where youve seen walmart win first of all, walmart wins on price, they push everyone around they dictate price and they will continue to do that in a softening environment. The trends for the consumer, again, to be clear, are not great here and this plays into walmart. Should walmart be trading at a premium . I think so, because i think that multiple comes down. I think theyre going to be more profitable i think margins are going higher theyve made Major Investments in their stores, theyve made Major Investments in digital, in technology so i think walmarts customer is a similar customer, but not quite the same and therefore theyre not going to necessarily see the world through the same set of eyes lets talk about the consumer quickly. I saw something on bank rate today, and this actually was somewhat astonishing Second Quarter last year, serious delinquencies for credit cards were 3. 35 in the same quarter this year, the Second Quarter, up to a little over almost 5. 1 thats a marked jump and were looking for cracks in the consumer armor, well, thats the beginning of it, for sure, when you see that. All right, meantime, we are watching the tenyear yield. It popped on the back of the fed minutes, then gave back some of the increase the rate climbing as high as 4. 28 . Thats a level last seen in oekt f for more on what that means, lets get to cnbcs steve liesman. Steve, you know, weve had the pleasure of hearing fed officials since that last meeting. Is anything really different from the fomc minutes versus what weve heard recently . Well, i think weve got a little bit more disagreement among fed officials. So, at the july meeting, remember, they hiked by a quarter point, right and they thought more hikes would be needed. A minority emerged suggesting the case was not so clear, and even two participants, we learned in the minutes today, thought the fed should not have hiked at all the minutes said heres the sort of juxtaposition of two different ideas. A number of participants judged that risks to the achievement of the committees goals have become balanced. Most see kill sant upside risks to inflation, which could require further tightening of Monetary Policy. That was what moved the markets. The minutes have been more balanced, but i think its too early to sound the allclear on rate hikes you have cpi, of course, came in below expectations after the meeting. Payroll growth did cool again, that was after the meeting remaining above trend. It was retail sales and Industrial Production today above expectations, and these gdp forecasts, as you know, melissa, have been raised sharply for the third quarter, so, the outlook for gdp, i think, is really important to the rate outlook here, because the minutes said many think that you need below trend growth to bring supply and demand into balance. The economy is not below trend at this point. It may be quite a built above trend. And im hoping we get some clarity on the feds next move next week. It could come at the jackson hole meeting the likely speech by fed chair powell, and then well have some interviews with several fed officials there. Steve, for so long, the focus had been on whether or not the fed wug going to hike again, how many hikes, and to some degree, we are focused on that, but it seems like the next dimension that the fed would address would be, maybe an opportunity like jackson hole would be how long Monetary Policy remains restrictive. Do you think the fed, jerome powell, tackles that policy dimension in this speech to really hammer that home . Because the fed doesnt necessarily need to raise rates again, but if it keeps rates elevated, it will still be restr restrictive. I think thats a smart way to think about it, melissa, because what he doesnt want to talk about is cuts and i think hes sort of done talking about hikes. So, although, i think he wants to keep those on the table, so, i think the next sort of macro question is, how long do you stay on hold and there is this question out there that the fed, in order to not become more restrictive as inflation falls is to reduce rates. So, if its going to stay there, if you look at the way the market is structured, 37 probability of a rate hike in november, so you know, 40 , call it wherever, a little bit elevated today all day, especially in light of the higher Economic Forecast weve had, but then look into next year, and now you have cuts built in, and the market and the fed are a little bit offsides on that, a little different there, but the market starts to see rate cuts coming in may, and then more as the year goes by with about three rate cuts built in for next year all right, steve, thank you go catch your plane. Steve liesman. I love that shot from the airport. A beautiful shot it is what do you think last year was an eightminute speech out of jackson hole from jerome powell. And it was similar but i think they have some run well, no pun intended, some runway to sort of i think they can start to put some test balloons out there just to see, especially given whats going on with the bank of japan, their bond market, yield curve control seemingly losing a little bit of control, and whats going on in china that may give them air cover to talk a little bit more dovish than theyve been, so, well see, but it can go either way. Ill tell you, in my opinion, closing above 4. 25 in the tenyear yield is a big deal these are levels we saw in october, and if you recall where the equity market was in october, it wasnt particularly good i think to think about this in the context yesterday, the intraday was 4264, and for us to close at that level is kind of psychologically important. Karen . Im starting to think, you know, if they do hike, then it will be a little more dovish if they dont hike, it will be a little more hawkish. Just trying to, you know, keep people sort of from getting too worked up or too excited over the idea that theyll start cutting. I dont think they want i dont think they want that out there. No, i think they want to put the cuts, you know, like right sounds like theres some dissent. I had thought im a little surprised there was i dont know, well see where the next meeting goes, but i think that higher for longer, how could they not be until something dramatically changes we keep expecting labor to change it hasnt retail is good right, production for more on the fed and jackson hole, lets bring in randall crosner. Great to have you with us. What is powells number one job at jackson hole next week . Last week, he ripped up the script and he gave a much sh shorter speech and said the same thing eight times, inflation is our priority, so, in some sense, hes not going to take a victory lap, but theyve made a lot of progress inflations come down a lot, they raised Interest Rates quite a bit. And i think hes going to talk about how inflation is starting to come down, but that the fed needs to continue to remain vigilant, exact lip as you guys were just describing they dont want to give any signal theyre going to be cutting any time soon and theyre not going to be cutting any time soon. Randy, its tim thank you for joining us how is the fed viewing the rest of the world right now and some of the issues, were starting to see may make their job easier, may make their job more tiffdifficult. Theres flight to quality going to the dollar, a dynamic with the chinese economy, and and even other Central Banks that are making the fed even on a relative basis look more hawkish than they might. Is that good or bad . Theyre going to take that into account, and certainly were getting a lot of negative news out of china, so, china is slipping into deflation, theyre cutting rates. Other Central Banks are holding or are raising rates and so, very, very different in different parts of the world i think they would like to see a little bit less excitement and activity globally, not that they want to see recession, but you know, as the minutes made really clear, and their statements have made really clear, if the economy continues to be kind of steaming forward with near record low unemployment levels, increasing gdp growth, its really hard to see how thats going to be consistent with inflation continuing to come down and staying close to their 2 goal, so, i think a little bit of slowness in the rest of the world will be welcome, but certainly they dont want a global recession randy, when you look at it, you just touched on it does the fed have to wait until the jobs market cracks thats number one. And what do you think about long and variable lags . Because theres a lot of stuff that could still be coming down the pike, so to speak. For sure. So, my university of chicago, milton friedman, Great University of chicago economist 50 years ago talked about long and variable lags of Monetary Policy and boy are we still seeing that today, because the feds been at it for year, year and a half and the labor market is still, you know, near record low Unemployment Rate. So, i think exactly as you said, theyre going to wait to see some of the heat coming out of the labor market wont be satisfied until they see the Unemployment Rate start to move up others will say, as long as the wages come down a little bit thats where people around the table will disagree. But i really dont see how they can feel comfortable to say, okay, were not going to be raising anymore, if the labor is as strong as it is now randy, we got earnings this morning from target, were getting earnings tomorrow from walmart, and so many people are expecting the consumer to endure more stress as the year goes on, because theyre taking on more debt, theyre paying higher rates, theyve got Student Loans they have to start repaying in october. Whats whats your take, do you think the fed, you know, takes them into consideration when thinking about these hikes . Or do they wait to see that impact on the consumer i think theyre still waiting to see the impact, because the consumer has been resilient, con Consumer Confidence has been strong its really quite impressive how, whether its covid or all these Interest Rates moving up to levels they havent been in many, many years, consumer has been pretty resilient. And thats great, but it also makes the feds job a little bit harder, so, i think theyre going to want to see a little bit less less strength there, a little bit more moderation before theyre going to be able to feel comfortable and say, okay, no more hikes. But theyre not going to be talking about cuts for a long time randy, thank you. All right, so, whats the Market Reaction to that message if that message is loud and clear next week, guy, in terms of no rate cuts in the near future, get that out of your mind markets, were not talking about that yet markets not going to like that because i do think my sense is, obviously in the last week or so, the runup in the rally has been predicated on that, some hope, in my words, misguided belief, that the beginning of next year, january, february, going to be rate cuts. I dont see that happening so, if they were to completely take that off the table, despite the fact that weve sold off pretty significantly, i think youll see a selloff in the market. Coming up, afterhours action in cisco shares on the move after reporting results. The latest numbers ahead. But first, all eyes glued to the likes of suits and bluey, guys favorite show. Streamers logged billions of viewing minutes in july. What it means for the billions of dollars up for grabs in the streaming wars dont go anywhere. Fast money is back itwn o. fan 1 there ya go thats what im talkin about josh allen is this your plan to watch the game today . hero fan uh, yea. I have to watc