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CNBC's "Fast Money"
Treasurys Turn Higher… And Novo Sinks After Trial Failure 7/31/26
00:43:29
U.S. Treasurys popping to end the week as the 2 Year hits a near two-decade high and the 10 Year reaches highs not seen since January 2025. The traders break down the reason behind the surge and if this could affect the next Fed rate decision. Then, Novo Nordisk tumbling after a heart medicine trial failure. Mizuho securities healthcare sector specialist Jared Holz lays out how the company can coarse correct, and what this means for the broader pharmaceutical space. Plus, Amazon surging 15% on the back of its earnings while Exxon loses steam, and counting down to SpaceX’s earnings report as the aerospace giant trades well below its IPO price. Fast Money Disclaimer
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Regarding that seat on the committee, we're promoting quarterly earnings.
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Every day shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps, you can set your proxy voting preference for your index funds. Visit vanguard.com investorchoice to learn more. Vanguard investors own shares of our index funds, which own shares of the companies they invest in. Available for Vanguard index funds that participate in Investor Choice. Vanguard Marketing Corporation Distributor
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Live from the NASDAQ markets in the heart of New York City's Times Square, this is fact money. Here's what's on tap tonight. Yields spiking, the 10 year hitting 18 month highs while the 30 year is at levels not seen since 2007. What's driving these moves and what does it mean for the broader markets? And pipeline problems for Novo Nordisk? Why the company's latest drug trial results and shares sliding today. A top expert weighs in. Plus Amazon and Apple move in vastly different directions. Software stocks get their group back. And the countdown for SpaceX shares hitting another new low ahead of earnings and a lockup expiration. What the options markets are saying about the stock right now. I'm Melissa Lee, come to you live in studio. Be at the NASDAQ on the desk tonight. Courtney Garcia, Steve Grasso, Fano and ICE and Tim Seymour will join us shortly. We start off with the latest move in this week's great rate rally. The 10 year spiking as many as 9 basis points today hitting its highest level since January of last year. The 30 are also ticking higher, closing in on the 5.3% mark for the first time in 19 years. The jumps coming after two of the dissenters at this week's Fed meeting laid out their cases for the central bank to hike rates. Cleveland's Beth Hammack saying action was needed to rein in inflation, while Minneapolis Fed President Neel Kashkari said small moves now could preclude big moves later. Stocks meanwhile whipsawing during the day, though major indices all ended the day in the green and managed to pull off gains for the week as well. But do the moves in the bond market suggest there's more volatility to come? And could these rising rates be a cap for equities? Courtney, what are your thoughts?
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E
Well, I think the fact that markets have been holding in so well here despite the fact that the 10 year treasury has been increasing is actually a very good sign. Right. Because that really should be a headwind for specifically your long duration assets. We just had a really busy week here with tech earnings and the fact that markets are actually looking past the fact that inflation is going up and the fact that this could be a headwind means that markets are really more concerned about earnings which have been coming in strong. And the markets broadly speaking have been holding up really well. So I really like a healthy, broadening market. We're continuing to see that. I really like that sign of the markets.
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F
Yeah, I agree with that. I think that the fact that they've been moving in tandem really is, is, is positive for the, for the marketplace. Also when you look at break evens, break evens have not increased. They've stayed similar to where they were pre Fed meeting. That means that this is just opposition. So I don't know how much that really means that, that the market isn't worried about inflation. But if, if the market was worried about inflation, we saw the spike in yields because somebody screwed something up in the Fed. Probably see break evens break and we haven't seen them break so they're static. So I think that's positive for the market.
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Yeah. Tim, what are your thoughts? There's also BOJ meeting last night and nothing happened. But the thought now is that there will be a hike in September.
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C
Yeah, yeah. It was a week where a lot happened, certainly with the dollar with. And BoJ didn't do what I think we wanted them to do right now. I think it was a week about central bank credibility. I mean I understand that Washes is trying a different approach to communication but he's saying, he's saying less, the market is saying more, the data is saying a lot as well. So I know we're all relatively pleased with the equity performance with higher yields this week. That's great. The question is, do you think this is a double top in yields or do you think this is actually a breakout and you know, back to the hyperscaler issuance dynamic and the longer duration and the 10 year kind of and longer base maturities that they're issuing against. I think that has had a lot to do with what's been going on, especially when you consider it as investment grade. So interesting week, wild week and important to bounce today and really yesterday I should say at that hundred moving day average for semis which have led us all the way and led us back today, I'm not ready to wave a white flag on semiconductors here.
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A
Bono and I talked to Rick Santelli in the last hour and he said 5% on the 10 year yield was in sight at this point with these new highs are reaching now. And so I'm wondering, you know, 5% would, would be different for this market. Well out of the range it would
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be, it would be a bit of a shock to the system. And I'm, I'm with the others in terms of, I think if you look on a week to date metric, certainly it seems a bit more benign. But if you look at some of the intraday and close to close move that we've seen, we have seen what seems to be both volatility around the bond market as well as within the equity market. So I'm not as convinced that we're past the bout of volatility that inflation and, and the Fed's approach to that are translating there in terms of 5%. I think that sets up interesting given some of the volatility that we've seen around CapEx. So if we were to have to now finance a lot of those capex expansions with debt at a higher fixed rate, I think that that sets up for a bit more challenging second half of the year for sure.
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Yeah. By the way, we do want to touch on this story, one that we just brought to you in the last hour. The New York Times is reporting that Kevin Warsh is considering reducing the frequency of Fed meetings. Currently the central bank meets eight times a year. We also talked to Matt Peterson, cbc.com who covers the Fed and he said by, by law the Fed is only mandated to have four meetings a year. So imagine if we went from eight to four. I mean, talk about volatility. We had volatility with the last meeting in the press conference. Reducing the meetings by half would be a whole other ball game, I think.
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E
Yeah, and I think this is very clearly kind of along the lines of what he was saying, which he wants less communication from the Fed, not more. And I think ultimately markets are just going to have to follow all of the other data. So rather than be so reliant on what the Fed is saying at every one of these meetings and I don't think he's necessarily liking the fact that every time he's saying I'M not raising rates but everybody is just hanging on to every word you're saying at the press conference. That's what he's trying to get away from here. So I think we're going to have to more depend on PC numbers, CPI numbers, consumer spending numbers to really tell us where that inflation is going. And I think that's what the markets are going to have to rely on.
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We're already dependent on this day. I mean we're already data dependent and we're looking. Yes. And we're looking at every single little.
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Yeah, I think, I think the market went from really transparent or the Fed went from really transparent to opaque now. Right. But when you think about it, what move the 10 year and what move rates when Powell was chair his talk. Right. So Powell was of the mindset that he wanted to lead the market to where he was going. So there was no surprises. I think what war wants to do is let the market figure it out on, on its own and then do it because maybe not to be a surprise, but why would there be any preconceived measures? So if my opinion is the market's going to figure out how to trade anything, the input that you give them is the input that they're going to take out. I'd rather have it this way than have the rates market lead what the Fed is doing.
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I get what you're saying but Mike Sentinelli brought this up in terms of the story and that is if you only meet four times a year then potentially if you're in some sort of rate hiking cycle, potentially that we might be entering at some point, then those moves would, could be more jagged. There might be a 50 at a meeting instead of a 25 and a 25 or there could be intermitting moves which would also introduce extra volatility. I don't know about what, what it just sounds like we're in less information is more volatility I would imagine.
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G
Yeah, I mean I can't agree more and I think the market actually could digest it if there was some consistency. What I think what I find personally challenging is the fact that we're essentially in a situation where we're evaluating all of the measurable tools as well. So there is really no apples to apples comparison. And so to be more opaque in an environment where the metrics that one is using to evaluate inflation, I think that's where the, that really is where the volatility stems from. If we were saying listen, we're going to be consistent in terms of how we Meet the number of times we meet the way we're measuring inflation or we're only going to change one of those. But, but changes across the board in an opaque messaging environment. I think that's the real challenge.
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Here's some Fed trivia, Tim, that I know you'll appreciate because you love Fed trivia.
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Okay, who does?
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The last time the Fed, the last time the Fed had meetings that were APART Longer than eight weeks Spanish was in 1981 under Paul Volcker. After that they changed it. He adopted Paul Volcker, adopted the new eight meetings a year schedule.
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C
And it's a bit ironic because Volcker, the Volcker Fed was known to be extremely austere, to be aggressively both fighting inflation and arguably most in line with the wash, at least the model that was just putting forth here. The problem with this week and this Kevin, was doesn't care what I think anyway. But, but the market is saying a lot. First of all, the data is saying a lot and the market was saying from that reaction from the Fed meeting, lack of information, whatever is that the Fed isn't moving fast enough. And three dissents wasn't enough. And that, that's, that's clear to me. And again it was, it was almost a credit reaction. The dollar sold off, rates sold off the six month chart and the ten year is a chart. If you want to be long rates, long, higher yields, you're buying that chart. There's nothing about that chart. Looking at it today, looking how we closed on the week that says rates aren't going higher.
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All right, let's move on and talk about tech. It was a tale of two very different tech stocks post earnings today. Amazon having its best day in 14 years after saying its cloud business. Drew grew 37% year over year, the fastest clip in 18 quarters. Meanwhile, Apple dropping 7%, losing over $400 billion in market cap. The iPhone maker warning supply constraints will weigh on revenues in the current quarter. It's lost 10% since hitting a record high just on Tuesday. Bono, when you think these moves were, were too much, too much for a reaction for, for what actually happened, the
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size of these companies. Yes, it's absolutely shocking. I think on Amazon side it's pretty interesting only because there's been so much criticism around free cash flow compression or deceleration. Capex spin. Amazon has done just that. I think what has really differentiated them clearly aside from the bond growth is the visibility of revenue and backlog attached to that capex spin. So for me I saw it as a modest positive clearly aside from the 15% move because you can spend if you can justify the monetization and show proof of long standing visible cash flows around it. Apple, I think it was really a story about valuation going into it. Clearly I got this one wrong. I thought it perhaps could continue to be a port within the storm. I think really the memory chip situation is challenging and the other thing that I think really sets up as a challenge is the fact that the service revenue growth really wasn't up to par. And if that's the highest margin business and you're trading at a premium multiple, you needed that to hold in and you didn't get that.
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Is this a buying opportunity for Apple, Courtney?
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Well, I think the trouble with Apple still is it is still at a higher valuation. Right. So I think this is really priced to perfection. I think that's what this came down to. And so I mean the numbers actually really weren't bad but the guidance was not what people were expecting. And I think when we see the next iPhone release we want to see that with the memory chip pricing are consumers willing to eat that? And if not it's just going to come out of Apple's margins in which case can you justify their higher valuation? Maybe not. So we own Apple. It's something we have as part of our portfolio but it's not something I'm going to jump into at this point in time. Just off.
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Yeah, I think Apple was, was not even so much priced for perfection. I think was priced to fail because everything was going so well. Now it becomes an execution risk. So they didn't spend any money that the others did on Capex but how are they going to get to the promised land on AI I think is the question Amazon I think, I think Bono and nailed it. If you could have your return on invested capital show up with larger margins, that's a win.
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Right.
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And Microsoft gave them the playbook. So I think when you came into the to the Amazon so I think if you look at it Microsoft was just right. Amazon was probably the parge was a little bit hot where they showed a lot of margin improvement and AWS improvement. So I think they, they worked it perfectly with the marketplace.
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Yeah. And for Amazon, Tim, I mean not only did Jassy was he successful in clearly selling the narrative of Amazon and how it will spend its money and how it will be a good steward of capital, but also the funding needs for Amazon aren't as great and maybe at risk with that higher interest rate environment as let's say a matter which you know there is already, already concerns about the price that Metta would have to pay an interest expense going forward because given the change in what investors are demanding, deal over deal.
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Andy Jassy's communication and comments are with so much more certainty than what Mark Zuckerberg did or is able to do, especially with the core businesses and especially with the reacceleration reacceleration of us. Remember again, 37%. I mean the street was, you know, it was 3132, whisper was 3334, blew it away again. He was very, very bullish on the opportunity. As Bonwin has talked about the ability to talk about a $25 billion run rate in terms of AI at this point and where that has grown is exciting. It's probably, you know, relative to the capex, it's a drop in the bucket but it does show the kind of growth you're looking for. And I, as I, as I, as I said yesterday, I think the fact that Amazon has multiple businesses with massive total addressable market growth and that includes hardware, chips, that includes cloud, that includes obviously retail and it's just to me a story that's a lot easier also on a relative valuation basis other than to Microsoft. So to itself, you know, somewhere even after this move, you're talking about 25 times at the most, 27. And I think that's attractive.
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Well, most, with most of big tech earnings out of the way, where did markets stand heading into August? Megan Horneman, CEO of Verdance Capital Advisors, joins us now. Megan, great to see you.
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Great to see you.
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What was your, what was your sort of overarching takeaway after we've gotten all of the mega cap earnings, tech earnings specifically out of the way?
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I think the one thing that we have to look at is this earnings season we saw not only were companies that beat the, beat their estimates, but those that missed, they're actually, they were declining in the days after their earnings report. So with the big tech out of the way, the one takeaway that I have from those tech earnings is that investors don't have that appetite to just continue to pay and pay and pay without any clear, you know, clear insight into what these, these, this CapEx spending is going to do from an earnings perspective. So big tax out of the way, you know, what's the catalyst here that's going to keep the, get the market to continue to go higher? We just don't see it. I think there's many more risks that we have going into August and the second half of this year.
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At the same time, it is amazing to think that for the past 11 weeks the S&P 500 has been roughly at 70, 500 steady. No matter what you throw at it, whether it be earnings or, you know, a reacceleration of the conflict in the Middle East. Megan, so is that are you glass half full or glass half empty?
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On that long term, we're very constructive. So I do think that there's going to be opportunity, but in the near term, I hate to say glass half empty, but I am very concerned that this market's getting complacent. These risks that you mentioned, it's not just that, it's tariffs coming back into the picture. We talked, you guys discussed the uncertainty around the Federal Reserve, the steep deepening of the yield curve. This is a big concern here. And typically when you see that, you're going to see the risk for PE contraction, earnings are very optimistic for the remaining quarters of this year. Margins are sitting here very high. Typically people would say to buy into that, but these things are sitting like this when we're facing all of these headwinds that are going to come at these companies in the second half of this year. I just think there's more downside risk in the near term than there is upside down.
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F
So, Megan, when you look at safety, when you look at the marketplace, the discretionary segment with the help of Amazon, actually led this week. But if you pull back the lens for a year, it's been energy. So that's one of the headwinds that we could see along with tariffs. Is energy a place where you would hide?
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B
Not necessarily right now. I think energy is very concentrated in a couple of different names too. So you have to be careful there. I think, you know, some diversification and having some energy stocks is not a bad thing, but I wouldn't be adding money to it at this point. Is going to be very volatile as this on again, off again war continues. You know, we saw what happened before one tweet away from energy prices going down. But at the end of the day, you have to look at what you're pricing here. What are you paying for these, these prices of these energy companies. And I think you have to be very careful. I think there's a lot more risk in that.
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E
Hey Megan, it's Courtney here and I hear what you're saying about the short term risks. I think all of those are things that investors do need be concerned about. But if you are an investor here, are there any areas of the market that you think are maybe Valued correctly or are worth getting into here, I mean, or would you just be completely on the safety side?
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B
I wouldn't be selling anything necessarily that you own, but I would be looking at your portfolios to see if you have drifted apart from where you want to be. From a weighting perspective. There are areas, whether it's small and mid cap that we did like a lot coming into this year, but they have run so much. Make sure that you, you aren't overweight in those areas. We still do think in the environment we're going into with, with higher interest rates with the Fed possibly having to get more aggressive than some have anticipated that value stocks have, some have and they're an opportunity there, but they're also expensive. I mean if you look at the, the Russell 1000 Value Index, it's also run up significantly and you're looking at the S&P 500 equal weight sitting here at a record high. So we're not saying be completely in cash, but we are saying evaluate your portfolios, make sure that what has worked this year that you're not drifting from your tactical allocation. Have some of that dry powder on the sidelines because we are constructive long term and we do think there's going to be opportunity. Second half, we're going to this negative seasonal period in the market as well. This could present some opportunities along with all of these other headwinds that we mentioned.
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Megan, great to see you. Thank you. Thank you. Horneman Advertence Bono. And you think we're too complacent?
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I think we are. I do think we are. I understand her logic being overweight cash. I think it's tough because that essentially means that you have to harvest from somewhere. I'd be looking somewhat at international and the US tends to outperform over any statistically significant period of time. But I do think that that might provide some downside protection as well.
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A
I'll have to go to Tim on that. Your thoughts, Tim, as the international emerging markets specialist.
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C
I mean Bonnevin is playing some sweet music here. I think if we solve the Middle east in a way which brings oil prices down below $80 a barrel, I think international can, if we can get back to a kind of either post war normalized environment on energy and commodity prices, International I think will outperform for the reasons also that are not, you know, valuation. It's always cheap. I think there are dynamics on some of these big thematic global trades that are working very well also around the world. I guess I just would get back to EPS growth I mean all this half empty EPS growth has never been better. And say what you want about the hyperscalers and even matter but but we haven't heard anything from any of them that that has you question EPS growth and in fact if you want markets to go higher I think you need participation by these companies and I think, I think we heard enough from the earnings releases from these companies, even Apple's that tells you north of 20% iPhone sales and you can expect that I think as we get into the fall and obviously we have a release coming out. I think the EPS story is why you're supposed to buy this market here.
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Coming up, software and Cloud 9 a look inside the sector's big week of gains and what comes next as Palantir kicks off another big week of earnings. Plus the dispatch from the oil patch what Exxon and Chevron had to say about the state of energy markets and where oil prices go from here. Don't go anywhere. Fast Money is back into
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this is
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Fast Money with Melissa Lee right here on cnbc.
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The board recommends approving regarding that seat on the committee.
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We're post quarterly earnings every day. Shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps you can set your proxy voting preference for your index funds. Visit vanguard.com investor choice to learn more. Vanguard investors own shares of our index funds which own shares of the companies they invest in. Available for Vanguard Index funds that participate in Investor Choice. Vanguard Marketing Corporation Distributor everyone's talking about
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Welcome Back to fast money, A strong run for software stocks. The IGB up six days in a row, closing out its best week in two months. Microsoft leading the charge up since Monday, up 22% and adding $560 billion in market value. It was the stock's best week since 1999 workday. Oracle Salesforce also rising double digits. But one notable stock sitting out the rally, Palantir. The company reports on Monday shares have lost roughly a third of their value this year. What do you make of Palantir?
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F
So it's always been a valuation game of Palantir and when you look at it, 42% of their revenues comes from the US government. But all the other numbers seem great. Revenue is up 85% last quarter. Net dollar retention means their existing clients is at 150% meaning their existing clients keep giving them more money. And commercial is up. The problem is truly just the valuation on the stock. But when you look at the chart, I think that you could probably buy it here, but I'm afraid that it got ahead of itself into the print.
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A
Well, the 4P E is what 77 says there or you can have a Microsoft which had a strong quarter. I mean I don't know if you thought that was the all clear kind of quarter for, for Microsoft Court.
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E
Well, I think what you're seeing, the markets are telling you is they are now looking at the companies who can distinctively monetize their AI system spending. And I think that's, that's what you're going to see on all of these earnings reports. And I think that's even going to follow through to a Palantir this week. And they are a really large part of this overall index. So I think seeing how they report and how the index moves, it's going to translate very directly and it's something to keep, keep an eye on.
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A
Yeah. And that, that inverse relationship between software and semis have, has, you know that that happened this week also. I mean software is up like 7% this week on a win and semis were down almost 4.
- [25:02]
G
Yes. So I mean we all are very well aware of some of the challenges that some of the memory names, you know, you've had a hedge fund essentially have to unwind because of some of the long and short positions across that software, that software sphere. I think the volatility. And then if you look at some of the names in addition to Microsoft, you have Palo Alto, you have crowd and then you also mentioned Salesforce. So you've had a massive drawdown in some of Those names and then you've had some of these LLM essentially going rogue, which to me has only brought more focus onto, you know, some of the software security and cybersecurity type of name. So I think within that complex there's, you know, quite a bit of moving parts and that's what's led to some of that divergence.
- [25:42]
A
Yeah, I mean on top of the breaches that we already knew in just the last hour or so, we're learning about more from OpenAI Tim. I mean which really does I would think help bolster to the case for cyber stock.
- [25:55]
C
Dr. Frankenstein's monster. You know, I look all software has not done poorly even in the downdraft in software, as we said, security has done really well. Infrastructure has done really well, data has done really well. I mean software hasn't been a one way trade lower. Let's be clear. I think the turn of Microsoft is part of the turn in the igb, make no mistake about that. And now up against the 200 days. So if you're looking at the chart, the fact of the matter is it like semis did yesterday, but it held the 100 day moving average which I think has been the more important dynamic from, you know, going back over the last year and a half kind of for the tech markets overall. So it's now really at its first test to break through the 200. The chart looks kind of interesting to me and I think you have to be very careful. But I do think that the market probably wants to buy the underperforming software names relative to the over, you know, the outperforming software names. I just kind of mentioned whether that's CrowdStrike or other folks that are really positioned on the security side. I think it's an interesting time to own software. I think you can.
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There's a lot more fast money to come. Here's what's coming up next.
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Profits surging for both Chevron and Exxon. We'll dig into the moves in the oil major stocks and find out if the energy trade has more fuel in the tank. Plus heartbreak in Big Pharma as Novo Nordisk's cardiovascular drug fails in trial. Inside the stock's latest setback and whether it can catch up to rival Eli Lilly. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
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What made you confident that you could do something that hadn't been done before? I have no fear of failure.
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B
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Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.
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A
Welcome back to Fast money. Chevron and ExxonMobil moving in opposite directions even as both saw profits surge in the latest quarter. While Chevron beat both top and bottom line estimates, Exxon fell short on earnings. CEO Darren woods joined Squawk Box this morning to discuss the quarterly results.
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C
In times like the second quarter, we had so much disruption. It was particularly difficult, particularly for our refining business. We are the largest refiner in the
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D
world outside of China and with the
- [28:36]
C
high, high margins and all the changes that we're making across our slate with the crude disruption, the ability to predict what prices were going to do on that business was difficult. That's where the miss came from, frankly. It doesn't represent anything in the operation or the underlying business. Which was an extremely strong quarter.
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A
Should note Exxon shares still up nearly 30% this year. Tim, what do you make of these oil earnings?
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C
I thought they were fantastic, especially for someone that's looking for free cash flow or cash flow from operations. And Exxon beat on their free cash. I think it was 19.2 billion. I mean, they beat by north of 20% what the expectation was on free cash flow. So why do people own some of these big integrated oil companies? Some of it is, is for div. And confidence and at least some sense that these are all weather plays. And therefore I think they both prove that the Exxon disappointment and it underperformed Chevron by almost three and a half percent today was because their refining numbers weren't like Valeros. It's, it's not a pure play. Valero is a pure play. Valero is essentially been outperforming the relative space. And I think the Exxon disappointment is something you should get over and go buy it.
- [29:46]
F
If you squint and look at both those charts, Exxon and Chevron, they look identical. They're both up 29% year to date. And you heard it from the CEO, they had a weak refining segment and that's where Chevron beat them. But when you look at the Middle East, Exxon is more exposed to the disruptions in the Middle east than Chevron is. But both of them, to Tim's point, you're going to get a yield in both. They both have the same year to date performance and the charts look identical. So it's about, about picking a horse on that day.
- [30:15]
E
Yeah, and I think some of this too. I mean, Exxon has done really well this year. It is at a higher valuation. But I agree with you. I think it actually has a lot more exposure in the Middle east, which if that does in fact get resolved at some point in time, I think is actually a better benefit for, for your Exxon than your Chevron. I really like those free cash flow numbers. I think that got buried in the numbers that came out today.
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A
Coming up, a no go for Novo, the trial setback that routed shares today and the prognosis for pharma stocks. Now Mizuho's Jared Holtz will join us next to dig in. Fast Money's back right after this. Welcome back to fast money. Stocks in positive territory in July's final trading day. The Dow rising 280 points, pulling out a gain for the month. The s and P up 7.10of A percent. The NASDAQ adding 1%. Meantime, roadblocks sinking 27% after bookings and daily active users missed estimates in the latest quarter. And Reddit shares tumbled 21% after giving a Google search traffic warning. Both stocks seeing their worst days on record. Apnomed rising over 50% in its trading debut after pricing at $16. The FDA is currently reviewing the company's pillar treating obstructive sleep apnea. It would be the first drug designed specifically for the condition to hit the market. And shares of H VAC and plumbing supply company Ferguson Enterprises jumping on news it will enter the S&P 500 at the start of trading on Wednesday. It is replacing Electronic Arts, which is being taken private. Meantime, a setback for Novo Nordisk shares plunging almost 9% after its heart medicine failed a late stage trial. The experimental treatment did not show a meaningful reduction. Major adverse cardiovascular events compared to a placebo. Cibo A Novo going back into negative territory for the year today. Let's bring in Jared Holes, health care sector specialist at Mizuho. Jared, great to see you.
- [32:01]
H
You too.
- [32:02]
A
Was the move lower commensurate with the expected sales that you would remove from the pipeline with this failure?
- [32:10]
H
Yeah, roughly. This was, I think modeled out to be anywhere between a 5 and $10 billion opportunity for Novo. It just, it depends on sort of what year you were looking at. So stock down 8% kind of makes sense. It's just a little bit of a blow to a company that needed a pipeline success. But I think the move is probably right.
- [32:30]
A
I would imagine this puts more pressure on them to acquire other companies, acquire other drug candidates. Although this, we should note, was acquired through an acquisition.
- [32:40]
H
That's right, yeah. I mean, these things are obviously hit or miss. The company has been pretty adamant that dealmaking is going to be a big part of its strategy going forward. I think they mentioned it on pretty much all the conference calls as of late and an investor meeting. So it probably just continues to put emphasis on the fact that they need to build out a pipeline to show investors that there are some interesting assets here other than obesity.
- [33:05]
A
Should we write off completely this drug? There are a couple of other studies underway involving the drug.
- [33:11]
H
I wouldn't write it off completely. I mean, these studies are very tricky. You're looking for these outcome studies. Studies have to prove to be statistically significant to a placebo. Sometimes you just don't get the, you know, the right patient population and the event rate does not go in your favor. So I wouldn't write it off completely, but the odds are obviously very low.
- [33:34]
A
Wednesday should be interesting, Jared. I mean, we're getting both Novo as well as Eli Lilly. Are we going to see anything that will change the trajectories of these stocks, you think?
- [33:44]
H
I'm not really sure. I'm pretty, pretty confident that Novo is going to have a good quarter. Whether it's enough to sort of appease investors medium to longer term, I'm not sure about. But the Wegovy pill has been a monster launch, one of the best we've ever seen. Numbers should be good. I think the street expects maybe a small guidance bump on the back of earnings. Lilly's been tougher to call, honestly, because Fandeo has been, I think, relatively disappointing as an oral GLP drug. But the thesis has, I believe, shifted almost entirely to the pipeline, including retatrutide. So we'll see. I'm not really sure that either thesis changes much. It's just I've been very surprised that investors have basically gravitated away from Foundeo this quickly and towards retatrutide.
- [34:37]
A
How? You know, I read your notes, Jared, and I remember in one note where you did address Reticutra. True, Todd, you sort of. It sounded like you're scratching your head, like, what kind of market does this have? Do we really need to have a more effective weight loss drug at this point when all of these drugs are very effective?
- [34:56]
H
Yeah, I've been very, very surprised that the Street, I think retail investors may be more so than health care dedicated investors on this one because of just the optics of a drug that gives, you know, near 30% weight loss with low doses, you can get there with the higher doses that the existing drugs, give or take. So to me, this is, you know, very incremental, but the street's been very positive on it. I just feel like at the end of the day, one of two things are going to happen. Either Retitrutide winds up serving the very, very high obese population, 35, 40 BMI, maybe even higher than that, or it cannibalizes the existing sales and winds up not being as big of a blockbuster. I think the way that a lot of investors are looking at it now is that this is going to basically take all of the share and become Lilly's best selling drug. I'm just not really sure we need it.
- [35:52]
A
Jared, thanks for joining us. Good to see you. Jared Holz of Mizuho Bono. What do you make of the space?
- [36:00]
G
You know, Novo, I wonder if I'm being stubborn. I just feel like there's been so much news, bad news baked in. I can understand the move today, but at some point I think it's compelling based on valuation. And if you do really get a drawdown in the broader market, I expect people to run and hide within health care and Staples and things of that nature. With that said, I have to acknowledge that I've been long and wrong and perhaps I'm just catching a falling knife when I know that I shouldn't. But I think that if I hold this and look up a year or two from now, I will not regret that decision. But there is no arguing against the fact that there's no momentum in the short term in this name.
- [36:39]
A
Yeah, I mean, I think, Tim, you're in the same camp as Bono and at this point, it's like it gets no credit whatsoever for one of the most successful drug launches in history.
- [36:50]
C
Yeah, we'll go. It's almost why that option show that used to be on Fridays, that should still be there because it was such a great show. You kind of have this, this strangle dynamic with those earnings. I mean, I think the numbers are going to be good, but if they're not, I think this stock is going to get punished. I think it has been de risked and I understand that the cardiovascular pipeline was potentially a multibillion dollar sales opportunity, but a $15 billion reduction in market cap, again, I'll leave that to Jared. Sounded like he thought it was commensurate. I think the sentiment around this company is so low that it won't take a lot to Continue to turn it. I think you can be long here.
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A
Coming up, the SpaceX slide gaining steam ahead of the company's first earnings report on Tuesday. The big bets options traders are placing into the print when fast money returns.
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D
As America celebrates its 250th anniversary, CNBC spotlights the companies that rose with the nation and continue to shape its future.
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I
It's incredible to think about the fact that we've operated across four centuries of American history and through all of the innovations that have occurred during that time, both for the nation but also for the financial system. I'm Robin Vince. I'm the CEO of BNY. In 1789, President Washington was inaugurated. Alexander Hamilton was the first secretary of the treasury just installed in his post. Hamilton believe believed in establishing the credit of the nation and ensuring that the United States would be able to come together as one country. And he turned to the bank of New York at the time and BNY lent the money to the nation. $200,000, the first ever loan to the United States as a new nation to be able to go about the business of building a country. If you think about the same principles that he brought to the bank of New York, it was to be resilient, to be an innovator, to be able to participate in that fledgling country of the time and to be able to power it forward. And then as the merchants gathered under the buttonwood tree a few Years later in 1792, the bank of New York was actually the first stock traded on the exchange. And it was really a moment of crystallization, that beginning of the capital markets of that new nation. We were part of supporting the build out of the Erie Canal. We supported the build out of the subway system. We launched U.S. treasury clearing through computers here in the United States. It's that story of innovation. The reality that when you bring a group of people together with common purpose and setting a mission wrapped in freedom and the opportunity to innovate, you can do amazing things. That is the story of the United States of America. And in a way, it's the story of the bank of New York too.
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A
Welcome back to Fast Money. Big weekend ahead of the box office. A Spider man brand new day swings into the silver screen. Preview ticket sales setting a domestic film record at $72 million. The movie expected to gross nearly 270 million in its debut weekend. All this as IMAX extended screenings of the Odyssey into September as it's still selling out weeks in advance. Steve, I don't know if you've seen any.
- [40:24]
F
I have not Seen it. But, but I, but I hear that if you're going to see Odyssey, you have to see it on IMAX screen. You see the stock is reflecting that it's up 30, 30% year to date. Movies are back. People are going to movies. Covid knocked them on their butt, but they are coming back.
- [40:38]
E
I think it's, it's experiences in general.
- [40:40]
C
Right.
- [40:40]
E
So I think this is translating to. You've seen this with concert tickets, you saw this with the World cup. You're seeing this with movies like people are wanting out and doing things. And I think it's really interesting to see how these numbers translate where there's a lot of concern with the consumer and where they're going with inflation. But we'll talk to clients and they're complaining about everything cost so much. Oh, but I also just spent $7,000 on the world cup and I think you're seeing that with things like this too. You know, people are willing to spend their money on experiences right now that's
- [41:04]
A
happening and on good content, Tim. And you know, great content. Disney, Disney earnings out next week.
- [41:12]
G
Yeah.
- [41:13]
C
And so I could probably speak more on Disney earnings than as it relates to their slate. Then I could talk about the Odyssey. I took too much Latin in school. Yeah. I think Joshua really
- [41:27]
F
Latin to him. Fair enough.
- [41:29]
C
I think you have a dynamic here where we, we really do need to see a catalyst in Disney. It's not been a story where we've been. You know, there hasn't been follow through in terms of that flywheel and what's been coming out of the studio. I think the park cyclicality is what it is. The DTC growth has been strong but the margins haven't been great. This is a stock that's been dead money for six or seven years. I think there's a strategic change with the new CEO and I think I certainly, I certainly think that there's reason to be confident that there's better news ahead. I think the stocks de risk, I don't think it's that expensive.
- [42:05]
A
Van way and what are your thought mean? Do you think this falls in the category of a Novo Nordisk? You own this and you look up in a year and you'll be glad
- [42:11]
G
you own it at 13 times. I'm with Tim. I think it's the risk. Sure. I mean but again, as Carter would say, it's somewhat of a pair of twos. But yes, to answer your question succinctly, I do think that it is the risk. And the odds are in your favor. Favor over a two year time horizon, Tommy.
- [42:31]
A
SpaceX shares hitting a new low ahead of earnings next week. We'll dive into the options bets to find out what to expect more Fast Money into. Welcome back to fast money. SpaceX closing below the $110 mark for the first time today. Shares have now fallen in 17 out of the 22 trading days this month.
- [42:57]
G
Month.
- [42:57]
A
The company's first earnings report is Tuesday after the bell results turn things around. There's also a lockup expiration to throw into the mix. Mike, what are the options markets saying?
- [43:07]
G
Yeah, so there's a lot of Options activity in SpaceX. It traded almost 1.2 million contracts today. That's about 67% above its average since they started trading. The implied move right now on earnings between now and the end of next week is $18 higher or lower. That's 16.5% of the current stock price or a range between $90 to the low end and $126 a share on the high end. The call volume was high today, but a lot of the institutional prints were sellers. But an example of an institutional buyer was someone who paid 2 bucks contract for 510 of the weekly 90 strike puts. So that trader is obviously betting that the move could be to the downside.
- [43:44]
A
Yeah, it may be. Part of that Is that lockup expiration that I mentioned, Bono. And what are your thoughts on this action?
- [43:52]
G
You can be short volatility given the nature of this particular name. But I think like you said this, the lockup. And then if you look at short interest, it's tremendous. Believe it's somewhere between 25 and 30%. So you have the makings of a volatile move, possibly in either direction.
- [44:08]
A
What do you think about this?
- [44:09]
F
So I'm still long the stock, so I traded a little bit.
- [44:13]
A
I'm sorry, have you added any?
- [44:14]
F
Yes, but I sold some above 200, but then I added it at around 180. So it's not like I'm adding it here. I haven't been adding it here. But when you look at the free float, we're only going from about 5% free float to about 12% free float. The real unlock comes in October, which gets you about 30% of the free float. So I could see this, as Mike said, getting pushed below 100. But I think you also have to remember, the larger the float goes, the more passive buying because the index weighting becomes more. So I think you're going to see a little bit of offsets, but nobody's coming in to buy it. When they know they have an unlock coming up.
- [44:52]
E
Yeah. And I mean you have two things coming out. You have the unlock and which is one of several coming up. I think it's interesting to point out that this will be a good index indicator of how that may trade for future lockup periods and the earnings report. I mean I think this is going to be really crucial that investors need to see where they are going forward. So I think this will be a very telling week. It's clearly the volatility is getting priced in there.
- [45:10]
A
All right, thank you, Mike. Co up next, final trades. News alert on FIFA, the soccer governing body reportedly scrapping its controversial plans to sell off the World cup to private equity after backlash deal which involved the firm run by Joshua Kushner would have valued the arm at $20 billion. No more though. Time for the final trade. Let's go around the horn.
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G
Bono and I said holdings BRT Jimbo
- [45:41]
A
by weakness of Citibank Exxon I think
- [45:45]
E
on the sell off you want to take a look at it.
- [45:47]
F
Steven Large pharma is going to be buying a lot of small biotech companies.
- [45:51]
A
XB thanks for watching Fast Money. Have a fantastic weekend. Mad Money with Jim Crane Resorts. Right now, all opinions expressed by the
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B
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A
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B
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A
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B
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air during sleep Daytime sleepiness I'm Shaquille o' Neal and this shouldn't be anybody's experience. Ask your doctor about Zepbound Tirzepatide, the first and only FDA approved prescription medicine for moderate to severe obstructive sleep apnea in adults with obesity. Zepbound is a prescription medicine used with a reduced calorie diet and increased physical activity to help adults with moderate to severe obstructive sleep apnea and obesity to improve their OSA. Zepbound is approved as a 2.5, 5, 7.5, 10, 12.5 or 15 milligram injection. Zepbound contains tirzepatide and should not be used with other tirzepatide containing products or any GLP1 receptor agonist medicines. It is not known if Zepbound is safe and effective for use in children. Don't share needles or pens or reuse needles. Don't take if allergic to it or if you or someone in your family had medullary thyroid cancer or if you've had multiple endocrine neoplasia Syndrome Type 2. Tell your doctor if you get a lump or swelling in your neck. Stop setbound and call your doctor if you have severe stomach pain or a serious allergic reaction. Severe side effects may include inflamed pancreas or gallbladder problems. Tell your doctor if you experience vision changes before scheduled procedures with anesthesia. If you're nursing pregnant plant to be or taking birth control pills, taking Zepbound with a sulfonylurea or insulin may cause low blood sugar. Side effects include nausea, diarrhea and vomiting, which can cause dehydration and worsen kidney problems. Talk to your doctor. Call 1-800-545-5979 or visit zepbound.lilly.com.