← CNBC's "Fast Money"
CNBC's "Fast Money"
A September Slump Or Fall Fury?... And Options Strategy Ahead Of Earnings 8/29/25
00:46:35
Stocks wrapping up August with a drop, but still seeing another month of gains. Does the market action this summer setup stocks for more gains ahead, or will the rally cool off like the weather? Plus, navigating next week’s earnings reports using options. The setup ahead of the numbers, and the names with the biggest implied moves. Fast Money Disclaimer
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A
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It's not rocket science. Grayscale has been educating investors on crypto for over a decade. Grayscale invest in your share of the future. Investing involves risk and possible loss of principle. Visit grayscale.com for more information. Happy Friday live for the NASDAQ marketsite in the heart of New York City's Times Square. This is fast money. Is it a fizzle to the summer sizzle Stocks hit to end the week. Does this set the stage for a September swoon? Plus the results roll on another big site of earnings on deck next week. How options traders are setting up ahead of all of it like Broadcom, Salesforce, Lululemon and more. Plus crypto's rough week placing your bets ahead of sports betting's biggest season. And maybe, just maybe the most important charts right now, your traders lay out what they're watching. And on your desk tonight ahead of the three day holiday weekend literally on your desk tonight. To my right is Steven Gr. We got Mike Coe and Julie Beal with us as well. We'll take it. All right, welcome everybody. Let us start with your action today or maybe lack of buyer action because stocks did fall the down the S and P down a little bit but the Nasdaq dropped over 1%. The red hot chip stocks they got cooled off dragging down the index. The SMH semiconductor ETF had its worst day since April. That's in part because Marvell technology plunging nearly 19% after last night's earnings. Nvidia and Broadcom also lower. Kind of a sympathy trade but that made in video post a negative month. But let's be optimistic. It's Friday heading into a holiday weekend. Despite the down day the major averages all firmly in the green for the month of August. In fact the S&P 500 and Dow each seeing a fourth straight month of gains. The NASDAQ meantime continues to outperform. It is on a five month win streaks. Oh and by the way Steve Grasso small caps putting in their best month in nearly a year. You don't hear that often. No you don't. And while we haven't Heard it a lot the last couple years. So how do you see the setup as we head now into the say, back half, but the waning months of the year? Right. So didn't we just have a record high yesterday? What was it yesterday? They be making too much of this decline? No, no, I'm just saying. But let's put in perspective. When you start, that's what's what I do. I pull the lens back and I say, look at where we've come from. Look at that sell off that we had in April. Look at how fast that we regain that sell off. It was the fastest in history that we bounced back out of all the markets in historic fashion. We bounce back quicker than any of them. The show is called Fast Money. It is, it is. So. So when you really look at how these things collapse on each other, you have bull, you have bear markets that collapse on each other. They cycle through really quickly. I think we're going to have a little bit of temporary weakness in September, maybe for about two weeks or so and then depending on how those pan out, do we get the rate cut? Big for me and big for the market whether or not we get that rate cut. And I think people are starting to hedge their bets. They were leaning towards that 50 basis point. Maybe they're going to get 25 basis points of a cut. They're getting a cut in my opinion. And then I think we get back on the horse late October. Okay, Julie Beal, you've been hot on the small cap stocks for a long time. We've got new record highs on every major average except the Russell 2000. It is not quite back to where it was last November. Do you remain optimistic and if so, why?
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C
Yeah, absolutely. It's been on a pretty persistent losing streak, but it's justified. You know, the earnings growth for the Russell just really hasn't been there. It hasn't materialized. You can find great small cap companies that have had great earnings, but the index overall is still 40% non earners. So it doesn't surprise me that it's been a persistent underperformer. This rotation is interesting though. Clearly based off of value and people chasing a lot of the more cyclical value stocks feeling less worried that we're going to see a lot of tariff fallout. And I think that's fine and probably a fairly reasonable position to take. But this is a route. This is an area where people have been playing mostly passive. And I think that that outflow happens very, very quickly. Just as quickly as the inflow happened in August?
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B
Yeah. You know, Michael, listen, historically, September, if we go back to Guy Dami's birth year of 1928, he's not here to defend himself. If we go all the way back, you notice that the s and P500 has fallen about 1.1% in the month of September. Then generally we get some kind of a little rally heading in to the New year. So we got a, we got a rough historical setup. We got a Vix that's at 14, implying almost no fear or options volatility. And yet we've got to fight over the Fed, which we'll get to in just a second. And we've got a tariff situation that is still cloudy. How does Mike Co see the setup going into the next couple of months?
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D
Yeah, I mean the first thing I would say, just about today's weakness. I mean we're coming in, it's a fairly thin day. You know, we're going into a three day weekend. I'm really much more interested in what's going to be going on after Labor Day than in the 24 hours that precede it. You know, it is interesting as we look at the VIX where it is, that's basically the S and P options markets forecast for volatility over the coming 30 days and you know, 15, a little bit higher than where we were earlier this week, but certainly not very woolly. Now one thing I would point out, September is a slightly above average month in terms of volatility. October even more so, and interestingly November as well. But an important thing to remember, and this applies both to your statistic with respect to the returns and my statistic with respect to volatility and that is that, you know, pullbacks in the market and also increases in volatility tend to have a disproportionate effect on the average because they tend to swing a lot. You know, if the Vix is typically 15, 16 and suddenly it goes to 40, that has an outsized effect on the average. Similarly, when you get some kind of a pullback and September and October unfortunately happened to be in the months when a couple big pullbacks took place, it throws the average a little bit over 30 days. The average return for the S and P is probably in the neighborhood of 60 basis points over the long term and more recently significantly higher than that. Of course. And right now I still think the setup is pretty good. Like Steve though, I think everybody's eyes are going to be on the FOMC in September and if they get disappointed that could see that uptick in volatility and the pullback that you just referenced.
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B
Yeah, I just wonder why, you know, why anybody would do a whole take a big new position between now and then. We'll get to more on that in just one second. We'll come back to it. But right now, we got to get to a very different topic. That is the fate of Lisa Cook on the Federal Reserve. Her fate really still in question as today's court hearing ended without a ruling on President Trump's attempt to fire her. Eamonn Jabber's been on the story all day long. Eamonn, we appreciate it. It's been a long day. Where do we stand right now?
- [07:57]
E
Well, Brian, there's some real question marks as we go into the weekend. Now, this hearing ended without any kind of preliminary injunction or temporary restraining order from the judge to stop President Trump's effort to fire Lisa Cook from the Fed. So that raises the question of what's going to happen next week. We don't know. The judge said she wants to see some more filings. She wants some more information. She wants to consider what she called a novel issue. The hearing today was basically two hours of really metaphysical debate over what the idea, what the meaning of for cause is in the statute, because the statute itself that created the Fed doesn't define what causes the president can fire someone for and what causes he can't. So the question here is, how do we define this? The government arguing for President Trump here said it's a very broad authority. The president has got an enormous amount of discretion here. He can largely fire as long as he has cause, he can largely fire for just about any cause under the sun. Lisa Cook's attorneys argued, Wait a second. If it's anything the president says it is, then that doesn't really mean anything. And therefore this idea for cause doesn't exist. So the government ended up on this. Brian. They said cause is more than a, has to be more than a policy disagreement. So you can't fire someone because you don't like their stance on rates. It has to bear on the official's ability to do the job. So something about their professionalism. And then added in this idea that it also should be something that wasn't known at the time that the person was confirmed by the Senate. That last concession by the government was something that Abby Lowell, Lisa Cook's attorney, jumped on at the end and said, hey, wait a second. If the, if the definition of cause is, you know, if it was known at the time of the confirmation, it can't be considered now? Well, Lisa Cook turned over all of her mortgage and banking information to the Senate at the time of her confirmation. And so therefore this was something that the Senate committee would have had the ability to look at. And so therefore it's not eligible to be considered as for cause. So that's where it ended. All this debate is going to continue next week and we'll see if the judge does decide to issue any kind of temporary injunction to stop the president from taking any action while this court case plays out, which could be weeks or months.
- [10:05]
B
BRIAN and you referenced Abby Lowell. This is a heavy hitter, maybe the heaviest hitter in law right now. Abby Lowell, the name sounds familiar to a lot of our listeners and viewers. It's because this was Hunter Biden's attorney as well, was it not? I mean, Abbey Lowell is the defense attorney to have in D.C. if not America.
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E
Brian, you know, I was just reflecting on this. I've been in Washington for 30 years covering this stuff. Abby Lowell has done just about every major political scandal in my time in Washington. I mean, he is as plugged in and wired as it gets. And he's doing a number of these Trump firing cases now. So he's got all the information, all the arguments that he needs. The question is, does he have the facts on his side? I mean, the government would say it really doesn't matter what Abbey Lowell argues because the president has this authority, period.
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B
And she has not, again, we talked about it earlier, very quickly. She has not come out and said, I did not do this. There was sort of a I didn't do it. In the filing, in the filing, in the legal filing, it said if, I think you said if I did it, which I did not. But she herself has not made any kind of a statement. We have not seen her or heard from her. Yeah.
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E
And that's the question. So there's always in any kind of scandal, Brian, there's what the lawyers want you to do, and then there's the public relations fight around it. The public relations people would tell you, you got to get out there and defend yourself. You got to get your proxies out there defending you. You've got to make an argument for the public to buy. She hasn't really been doing that. And obviously, as a Fed official, she's not really used to this idea of fighting in a political sphere where public relations really matters.
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B
Amy Jabbers on the story all day, my friend, and we appreciate it. Eamon, thank you very much.
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E
Yeah, have a good one, Brian.
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B
All right, YouTube. So let's talk about that. Let's talk about inflation. Let's talk about the Fed not including Lisa Cook and more with Ben Emmons. He is founder and chief investment officer at Fed Watch Advisors. Ben, really appreciate you coming in on a Friday. Thank you very much. You are, I'm not going to ask you to adjudicate this or get into the politics of it, but does the outcome of this case, the independence of the Fed, whatever it is, does it matter to how we should look at the Fed as a rate making and policy institution?
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F
It does matter obviously because if it gets really influenced by outside forces, then yeah, it could be right. We have, you know, currently the rate cut price in you see a lot of people within the Fed shifting towards rate cuts and you could debate about whether that is politically influenced. Yes or no. Ultimately the markets I think really care about what's the Fed going to do here now? Are you going to cut or not and how, by how much and the influence in itself will then maybe be accounted for if it's the wrong timing, if they're cutting and it turns out to be the economy was much stronger and didn't need any cuts. So I think that's what the market I'm going to.
- [12:53]
B
Okay, I'm going to Steve Grass, I want you to jump in on this too. I'm going to say something. We got Julie Beal, we got Mike Cohen to say something a little bit crazy because why not? It's Friday. Sure. What I do, which is let's say you're leaning toward a Fed cut. You remember the Fed, right. You know the President wants the Fed to cut rates. We know that Jerome Powell has sparred with the Fed or with the President rather. So I wonder, is there any part of Ben Emmons that thinks, well guess what, now you're coming after one of our own, Lisa Cook, we're not going to give you the rate cut because they know that's kind of a gift to the President. Even if they think that that's what we need to do like is cut rates. That sounds political to me. Yeah. That sounds like they're politicizing the Fed as well. So it's a two way street. Yeah. So, but, but I'll let Ben answer that question. There's no probably no way to tell. But yeah, I mean it would be.
- [13:39]
F
Really interesting dynamic if that's the case. But I think, Brian, it comes down to what happens next week with payrolls. Let's say that number is really strong. Right. That will give them the reason to say Guess what? It wasn't as weak as we thought. We can maybe hold off here and you get that political dynamic, but ultimately they will use the data to say we're going to cut a naka.
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B
I think so. So when you look at the last couple of inflation numbers that we, we've seen, Ben, when you, when you take out housing and shelter costs, because that's the big thing and cpi, it's a third of CPI is housing and shelter costs. So that skews it because mortgage rates don't seem to come down. But when you look at the last one that we had that was that the core or the super core, that tells a different story. But I would say that next week is probably the most important week as far as data because we're going, we're going to find out in that dual mandate has the jobs number, has full employment taken precedent over stable pricing?
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F
Yeah, that's right, Steve, because it's so much tied into that labor data. Now that's the argument to make this rate cut. You know, that's what Baller and Bowman started and that's what power now signal that Jackson Hole even now Williams has come to that point too. And in the meantime we have this inflation data that does look stickier, does look a little hotter at the top, at least in the super core, as you mentioned, it's actually went from about 0.6 or 0.06 in April when the tariffs were announced, 2.39% today. So that kind of acceleration. So you know that this labor data really matters. I think next week, if it's as I said, if it is really strong, could give the Fed a reason to not cut. So that that's not in the markets right now.
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B
So do you think the Fed's going to cut? What are they going to do? September 17th, we want to know. Your firm is called Fed Watch.
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F
Exactly. So it is 85%. I think it's price. The market thinks it's going to cut. It's going to happen. So I'm meaning like this payroll report would have to be 3, 400,000 type of arranged job report with revisions being positive for the Fed perhaps change their mind but the market will change its mind to Right. So it's price I think that will do it. But then from there it depends a bit on how this data comes out of strong data, good data. October comes in doubt and that could add volatility to the markets.
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B
So just to get a little bit deeper on this, the Fed balance sheet is what not too many people Focus on. I know you do as well. 35 billion of mortgage backed securities still allowed to roll off each month. That has an upward bias to the 10 year which has an upward bias to mortgage rates. When are we going to see them cut that back? They cut back treasury roll off but they haven't cut the MBS back.
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F
Yeah, I think this meeting will be the decision to basically phase that out because if you start cutting rates and you do QT still on top and it is a mortgage issue, then I think that's the decision it will make. So they will face our QT at this meeting.
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B
You're talking about quantitative tightening.
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F
Quantitative tightening, yeah.
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B
Yes. And is that in some ways, Ben, I know we're going to go. Is that some ways more important than the fed funds target or no?
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F
Well, it's a passive tightening as we say, meaning that it's in the background. It's sort of happening. But that probably kept mortgage rates higher than maybe where they should have been. So yeah, it does matter.
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B
Ben Emmons, Fed Watch Advisors thank you. Thank you very much. All right, like I said, we got Julie Beal, we got Mike Koh still with us as well. Julie Beal, comment on what you heard. Do you agree with Ben about where you see the Federal Reserve and what you see them doing on September 17th?
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C
Yeah, I agree. I think that unless we have a very, very hot employment number, it was really clear from Jay Powell's comments at Jackson Hole that we are now moving to an employment focus rather than an inflation focus. But I do agree that at the margin, if you look at the CPI data, particularly in durable goods, you're seeing real pricing pressure. And we still have many companies saying we're going to take it on the chin, we're going to take most of these tariffs and let it come out of our margins. But they're not going to do that indefinitely.
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B
Right.
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C
They were at record high margins to begin with, so they had the space and the breathing room to do that. But many of them are talking quietly about being able to raise prices in the places that they can. So I don't think that we're really looking at the true measure of inflation as it pertains to tariffs. And I also think that because our labor supply has been curtailed as a result of immigration policies, you're going to see wage pressure as well. And I don't think anyone's really talking about that part.
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B
I know, and we're in Mike Co Listen, I kind of talked about the other part of it and I'm just Going to give my opinion a little bit because it's Friday. And why not? We could say the Fed is completely politically independent. That's bogus. I mean, every human being has a natural bias one way or the other. Jerome Powell is a, is a human being. Right. We know that he is prone to dislike the President. All right, that, that's pretty, pretty clear at this point. Do you think they get impacted at all in what they do because of what's happening with Lisa Cook? If I was a member of the Fed, I would be ticked off at what's happening to my colleague and probably friend Lisa Cook. And it might, even if I didn't want to admit it, it might entice me to act a different way. I just admitted personal weakness, so be it.
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D
Well, we all have personal weaknesses. I'd like to think that those who are making decisions at the Fed will be able to recognize those weaknesses and will focus principally on policy, you know, where Lisa Cook is concerned. It's kind of interesting because of course, it's not like she's notable as being a hawk, necessarily, and she has in her professional history repeatedly spoken about the Fed's dual mandate, which means that she would be focusing on the labor markets and that actually is probably more closely aligned with her own scholarly work in economics over the course of her professional life. So I don't know necessarily that the whole Lisa Cook debate is about monetary policy where she is concerned. And the other thing, and this was Steve's point, I believe, which is that when people think about rates and how difficult that's making certain sectors of the economy, the housing market, for example, that isn't anchored by the Fed funds target rate, that's going to be anchored by the 10 year, which as Steve rightfully pointed out, is going to be more closely influenced by what the Fed does with its balance sheet. And of course they have actually slowed the pace of the tapering in recent months anyway. But you know, that's really the area that you're going to have to focus on if you're hoping that you're going to reinvigorate the housing market.
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B
So. Okay, Mike, thank you. Steve, quickly, before we go to break, comment on that because is there a chance, because a lot of potential home buyers watching Fast Money right now are thinking they're going to cut rates and mortgage rates are coming down. There is a chance the Fed cuts rates in September and the 10 year bond which controls mortgage rates doesn't move, isn't there? There is a chance, but, but I don't think we're in that world anymore because we've seen that price action happen. The bigger, bigger problem we have is that 80% of the people who hold mortgages have a mortgage rate below 6% or so or even less. So those rates have to come down precipitously to get that housing market going again. That's why Bessant, Treasury Secretary Bessant is keying in on a large amount of cuts, not just one. All right, well said. Good discussion, guys there. We're not done though. Coming up here on Fast money, Affirm. Affirming its place among today's top winners. The how and the why ahead. Plus, wrapping up a bit of a bummer week for bitcoin. What is next for the space? The Fed gears up for that big time rate decision on September 17th. We'll give you the answer to that right after this. It's not rocket science. Grayscale has been educating investors on crypto for over a decade. Grayscale invest in your share of the future. Investing involves risk and possible loss of principle. Visit grayscale.com for more information.
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Trial period at shopify.com podcastfree all lowercase go to shopify.com podcastfree to upgrade your selling today. Welcome back to Fast Money. Shares of a firm topping the tape today. The stock jumping more than 10% after it beat earnings and revenue estimates and said it is posting strong guidance as well. This even comes as competition and e commerce. Steve continues to grow your take on a firm. Yeah. When you when you look at it. Well I'll start with the negative. When you go back a year ago quarter they were actually unprofitable. They had a loss of 451 million this this quarter they had a net income of 69 million. So they've had a great if everything that that they reported they beat on transaction volume looks great. Active consumers, active merchants, all of them are up 24%. Both of them, I should say, of Those are up 24%. The active card up 97%. So there is a need for this and they are filling a niche. But if you look back on a five year chart, on this stock, that chart that we're showing right now looks very bullish to me. If you look back on a five year chart, it's just making up all the ground that it lost in the last four years, basically, because that's in the chart. By the way, a firm is a buy now, pay later and a payments company, folks. And the chart that we're looking at here, that was Covid. When people were home, they were buying everything because they had nothing else to do. Right. So they're kind of. How much does that fall into your thinking when you look at a chart and go, well, that was a lockdown and pandemic when that was all there was to do in many areas. Yeah, I get what you're saying. This was the year after Covid, basically. And I guess my point is there's a lot of wood to chop. There's a lot of upside to come. But I don't know if you can, to your point, get back to that bullish scenario when we were coming out of COVID and people were still at home in lockdown, basically. Can you really make up all that ground? So how much green is left ahead? I would probably scale out a sum on this profit on these, on these pops that you see scale out of some. All right, in the meantime, we're going to switch gears dramatically. Caterpillar, obviously a very different company and a very different stock today heading in the other direction, down nearly 4%. Caterpillar warning of a bigger tariff hit than previously talked about, costing it as much as $1.8 billion this year, Julie. Up from $1.5 billion this year. Investors did not like that news today.
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C
Absolutely. I think, you know, along with the automakers, we are seeing more and more evidence on the industrial side of companies that are having a hard time managing through these tariffs. Right. I think they were able to front load their supply chains. They were clever. And now for the ones for whom this is really challenging, they're really seeing the impacts in their business. So I think this is kind of the first of probably many. What's important to know is many investors seem to be willing to look through some of the tariff pressure. This is kind of the first time investors are stopping and saying, you know what, actually this is a problem.
- [25:40]
B
Yeah, they did today. And we'll see where it goes because I think, you know, listen, the president, Caterpillar, great American company. Could things change if they lobby him enough? We'll see. All right, folks, there is a lot more fast money to come and here's what's coming up next. Bitcoin breakdown, the world's largest cryptocurrency smashing through multiple key levels to end a rough week for the space. We'll dive into the catalysts that could define its future next. Plus, we're giving you the action and the trade on earnings from Lululemon, Broadcom, Salesforce and more as reports keep rolling in. You're watching Fast MONEY live from the NASDAQ market site in Times Square. We're back right after this. All right. Welcome back. Major cryptocurrencies having a bit of a rough week heading into September. Bitcoin down about 7% this week, trading near 108,000. Etherium down by double digits in that time despite starting the week hitting a record near 5,000. Okay, so the markets went down a little bit today. What do you make of crypto's slide this week? Crypto is correlated. It used to be. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10.
- [27:03]
E
Minutes or less, including projected stock updates.
- [27:06]
B
Monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts. Football season is back. Sports business expert Mike Ozanian breaks down the latest numbers. The biggest and most profitable sports league in the world, exclusive NFL team valuations September 4th. CNBC uncorrelated to the overall markets. Now it's correlated. So if we think that September is going to be a weaker month for the markets, crypto is getting ahead of that. And also when you look at it, if the VIX is going to shoot up, possibly a Mike. Mike could comment on this. If the VIX is going to shoot up in September, Bitcoin and Ethereum should probably sell off. Seasonality is a weak time of year for both of the top crypto currencies. But let's remember one thing you touched on it. Etherium hit a record high. Bitcoin hit a record high recently. Yeah, I did flip out of my bitcoin exposure and I'm in eth now and for me, I think you're going to see a real fast push in the last two months of the year where these both can go much higher percentage basis Etherium will move more. Mike, got a hot take on the relationship between options, Bitcoin or anything else?
- [28:37]
D
Well, I mean I'm on the record for the last couple of years as being positive on the crypto space. Bitcoin for the last couple of years and Ethereum more recently. Obviously its association with stable coins is going to be important. Look, a bit of a pullback is to be expected after the big run that we've had. And to Steve's point, as you go into a higher volatility period, you know, this show is called Fast Money. The actors that are in the bitcoin crypto space are going to be amongst the fastest market participants there are and it's very high beta. So if you're anticipating an uptick in volatility, you would necessarily then also believe that this is an area where that volatility would be even greater. And it and it very likely will be. But overall I still think that the fundamentals remain intact both for Bitcoin and for Ethereum. And so I rather think of these as a little bit of an opportunity. Although the short term technicals don't look so hot right now.
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B
Not so hot right now. All right, people have been warned. Coming up, another busy week. Also on earnings, Lululemon, Broadcom, Salesforce, they are on deck. Next week we'll talk about how the options market is playing those games ahead of the earnings coming up. Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this. Welcome back to Fast money. Stocks ending August on a down note, but the major indices all positive for the month. The Dow closing out about a 3% gain for August. The S&P notching its fourth winning month in a row. But the Nasdaq saying hold my beer. Fifth straight monthly gain for the NASDAQ up 1.5% even with a pretty lousy day today. Gold also closing out a big month. Gold at an all time high. It's up 5% in August. That was its best monthly performance since April. And finally, the Wall Street Journal is reporting that Kraft Heinz may once again become Kraft and Heinz. Sort of. The report is that the company's going to break itself back up into two companies 10 years after the merger that brought the two together. The report says the breakup would spin off a large portion of the company's grocery business, which could be valued around $20 billion. Steve Grasshop argued that in the market. So only two ways to get rich, be an investment banker or be an attorney. Because they're going to, they're going to, they're going, they're going to fees out, fees in, fees out. Right. Break up, break out. Let's join and separate it. All right. Meantime, investors gearing up for more earnings reports next week expecting big moves out of some key names and retail. Mike Koh, what are you seeing from the options action?
- [31:22]
D
Yeah, so taking a look at some of the bigger names that are slated to report next earnings this coming week, I was looking first at Broadcom. So Broadcom is implying a move of about 6% after they report Salesforce, 7.4% recently listed Figma, 8.7% and Lululemon, a name that I've spoken about many times about 12%. So pretty choppy right there. You know, as I take a look at this, I think one of the opportunities might be found actually in Salesforce. I think people might take a look at selling a cash covered put there. I was looking out to the October 10th weekly options, the 225 puts, you could sell those for about $3.55 each. Now in the event that the stock does fall down, you would be buying the stock at 225, which is below the 52 week low. So I think that's kind of an interesting situation. And for those who are interested in doing something a little bit more complicated, you could also sell the 285 to 90 call spread. You're going to be collecting almost $5 for that whole package. Gives you a nice 1.8% standstill rate of return on that.
- [32:26]
B
All right, Salesforce, you got a comment on that, Steve Grasso? Yeah, I mean, when you look at Salesforce, they've been in a declining trend line for a couple of months now, if not, if not longer. So if, if you're starting to see in video, maybe topping out, there's going to have a collateral effect on a lot of these tech names. So I would let it breathe, breathe a little bit before you start piling into these. But I like the way Mike approaches that trade. Yeah. Julie Beal, you're looking out. Hey, brought it out. You don't just have to go, well, Broadcom, I guess, Salesforce, Lululemon, any name that you're particularly watching next week.
- [32:59]
C
I'm really curious what Lulu is going to say. Mostly about how they're incorporating tariffs into their guidance. They have been really in a very difficult for Themselves. And I think it's just this is a category that they created, they defined and now they have so much competition, it's been brutal for them to figure out how to compete. I'm really curious though, because the valuation could be kind of compelling. So I think if they end up in better footing, it's great because right now, at least on the buy side, people are haters.
- [33:29]
B
Well, correct me if I'm wrong, I'm not big into yoga. I don't know if that's obvious to the viewer or not. I just wanted to throw that out there. I'm not sure. Shocking, I know. At 64240 ish. No, no, no comment. What happens if you put the other foot on the scale? Oh, ew. Hey now. But wasn't Jul. Does anybody out there actually know retail isn't like that aloe and Vori killing? Like there's so much competition now in this space that wasn't there before? Or is that just crazy talk?
- [34:01]
C
No, absolutely, I agree with you. I think there's way, way more competition. Even though, you know, you can argue about the relative quality and merits of them. And I don't think that this company has been run particularly well. So a lot of the problems that they're having are self inflicted. That said, there's no asset that's so bad that price doesn't matter. Price does matter. Right. And the thing is is that the returns on equity in this business are still very high. They do have some part of a loyal fan base. You know, I think there's something to be said that if they can get this ship turned around, it might be an interesting candidate.
- [34:34]
D
Nine times Ebit. That's where I would leave you with Lulu. When you look at Nike that things trading 37 times EBIT. So Lulu's getting awfully cheap here. And I think there's a lot of crossover people who buy Lulu also buy Vuori. Judging by my American Express bill, that's true in this household at least.
- [34:49]
B
Okay. And by the way, speaking of tariffs, guys, we have a potentially big headline. We just have a headline. We don't have any context to this at all. This is happening right now. It's why I've been kind of distracted the last few minutes. The appeals court has ruled that Trump's tariffs are indeed illegal. Now if you remember, a court, an international trade court in Paris ruled that didn't really affect us. This is a US Federal appeals court ruling that the Trump tariffs are illegal. Now Scott Bessett Grasso recently said if this were to happen, it would be, quote, embarrassing for the United States. This will, I'm guessing, I'm going to speculate a bit here. This will lead to another appeal to the United States Supreme Court. This comes down again, I have a law degree, I'm not an attorney, but I can talk to it a little bit to the idea that if tariffs are a tax, the Constitution says that only Congress has the power to tax. Forget about all that stuff. Hmm. If we get this headline, this headline is happening right now in real time. Is this like a market ripping type headline or does the market sit back and say, let's see what happens with the Supreme Court. Well, it could do the same thing is doing with, with the Lisa Cook thing. But, but when you really start to look at what, what could happen, I, you know, I think the market's going to take a wait and see approach to this because as you said, I think the Trump administration is just going to appeal and take it all the way up to the highest court in the land and the market will sort of move sideways. Can there be algorithms that would read this as a positive headline for some names that have been dramatically hurt by tariffs? Again, I know we're waiting on some things. This is, forget about the politics of this. Mike Coh. I think this is a market story, right? We saw what happened in April when we had the larger than expected tariffs. The market collapsed, got destroyed, down 20% in a couple of days. Markets come back as some of the tariffs have pulled back again. This could be appealed. We don't know how much, if at all, of a market story is this. I just did a story, we just did a story about how Caterpillar fell 4% today because they were worried about the impact of larger tariffs.
- [37:07]
D
It's a big story, of course. Of course it is. Because, I mean, we see companies reporting that the impact is there. One of the things that we didn't see while there was a lot of uncertainty about the tariffs was what their true impact was going to be because they were on again, off again, on again. And as Julie rightly pointed out, there was basically some strategic planning that a lot of businesses went into in anticipation of future tariffs. Of course, the Liberation Day tariff sell off was partially because the degree the amount of those tariffs was so stunning. So the impact now is going to be more muted by the fact that since that time, the EU negotiation, the Japanese, the Japan negotiation, these have come up with tariffs that are somewhat smaller, but that doesn't mean they're unimportant. They are.
- [37:49]
B
Yep. Julie Beal, sit tight for one second. Again, this is a potentially huge market headline, but let's get now what we know with Megan casella in Washington, D.C.
- [38:01]
A
Hey, Brian. So just to catch everybody up on where this case stood, this is the consolidated case that the Court of International Trade had back in the spring found that most of these tariffs imposed for national security reasons or for reasons of international economic emergency, I should say, to be more specific, were not legal. This is the first round of appeals. This case is upholding that ruling. They're saying that they agree with the initial court. This is the appeals court saying they agree with the Court of International Trade, that because this statute does not say that this is an international emergency, that because of this international emergency he should be allowed to impose tariffs via executive order. That's why they're upholding the ruling. Now, a couple crucial points on where we go from here, Brian. One is that this will all but certainly go to the Supreme Court. So we know that will be the next step. We knew this court was listening to this on an expedited basis so that it could get to the Supreme Court even faster, potentially to get a ruling sometime in the spring or summer. What we don't know right now that is crucial is what happens to the tariffs in the meantime. Again, this is the vast majority of all of the tariffs the president has imposed so far were imposed under this IPA statute. So now the appeals court agreeing he doesn't have the authority to use it in that way. Court appears to be sending the decision on whether a universal injunction should go in place to stop the government from collecting the tariffs. They appear to be sending that back to the Court of International Trade to decide. So based on my initial read of this ruling, and again, it's quite long, we're still going through it. It seems like the status of the tariffs at the moment is still in limbo. Just one other thing I would flag, Brian, is just earlier today administration officials had filed a brief in this case to argue that they needed to keep collecting the tariffs, that otherwise it would put them on sort of sh. Diplomatic ground, they would be losing out on important revenue. A number of arguments laid out by different administration officials. So they very much want to keep these tariffs in place while we wait for the Supreme Court to hear the case. That's what we just don't know yet, Brian.
- [39:57]
B
Yeah, we don't a lot we don't know. Megan Casella, thank you very much. Here's two things, though, that we do know. As this is breaking at 5:45pm Eastern on a Friday heading into a three day weekend. Number one, that sound you hear is the collective scream of every supply chain manager in the United States because they're trying to adjust every day or every week to what this is. We'll see if this holds. I'm going to say this, Steve Grass, that I'm so glad that you're here, glad Mike and Julie are here as well because if the tariffs are seen to have held this market back at all, at all, and the tariffs are now wiped off, I don't see how this is anything other unless there's some political chaos type story that plays out here than a market ripping headline. Yeah, I mean the pushback is we are at all time highs so higher. That's the, that's the at all part part. Right. So the, the other side of it is, as Megan said, the amount of revenue that Scott Best, the Treasury Secretary has said the United States government will bring in, I think the last thing was above, above 500 billion. So there could be a healthy amount of that too. Just to give a little bit of a bearish tone to it, that with this country in the debt that we're in, if you're looking at 34 or 35 trillion in debt and then we have income coming in, there could be a negative part of that. But I agree with you all the companies that took it on the chin as far as tariffs, those should rally. But again, Julie Beal, and we want to be very clear on this. We said it. Mega Cassell said it, Steve Grasso said it. I'm sure you'll say it. The market may also not react until it knows what the Supreme Court may do because the Court of Appeals can do all at once this will no doubt be appealed. Donald Trump's not going to say, oh well, too bad, let's move on. That's not going to happen. So what do you think the market may or may not do with this news come Tuesday morning?
- [41:58]
C
I think if there's anything I learned from the firing of Lisa Cook, it's that the market is in a real wait and see for bad news. Let's hold out hope that cooler heads will prevail. So I have a feeling that everyone will sit on their hands and say until it's really clear, we're not going to make big movements around this. And I think that that's the real challenge for investors right now is you can't really factor this in because we know that the Supreme Court leans towards this administration and it's very possible for them to undo all of this. There's a lot of pressure. Just as Steve mentioned, we're collecting a lot of revenue and that's tied into a lot of the deficit reduction.
- [42:33]
B
Yeah, it is. And certainly we got to look at the bond market on that news as well. Again, folks, this headline just crossing right now, a US Appeals court ruling that the tariffs are indeed illegal. That ruling will likely be appealed, but I can tell you right now, Caterpillar headquarters, they're not unhappy about this headline. We're going to take a short break. We're back right after this. All right. Welcome back to Fast money. College football season that's underway, sort of. Tomorrow's the big day. Competition for sports betting is just getting started. Contessa Brewer covers the space for us and joins us now with why this, this is the time.
- [43:14]
A
This is it. Because that's the biggest opportunity for US Sportsbooks. It's the time when they can win more new customers, grow the pot of wagers. And the industry expects an 8.5% increase in handle. Now Americans are expected to wager $30 billion this NFL season according to the American Gaming Association. The lion's share of that will go to FanDuel, which is owned by Flutter, and to DraftKings. Both of those companies dominate the space in the United States and both have seen double digit gains in their stock price this year. They are facing growing competition from BET mgm, which is jointly owned by MGM and European company and maintain. And after losing ground for a couple of years in terms of market share, BET MGM has reversed course. Solid third place showing profits that pleasantly surprise the Street. And Caesars also is posting profits in its digital business. But its shares stand out in this crowd year to date down almost 20% when competitors are up double digits. The casino company has been hinting Brian, at the possibility of the spinning off its digital business to maximize value. All of these companies are dealing with not only their smaller competitors, Penn Rush, Street Interactive and the like, but the entrance of predictions markets and sweeps casinos and the offshore books.
- [44:34]
B
All right, stay there. Let's add another voice to the conversation from on what to expect for the upcoming sports gambling or gaming season is Morgan Stanley Stephen Grambling to talk about gaming and gambling. You're the most perfectly named man. Stephen, we're glad you're on. Who's looking? There's a lot of competition for that sports betting dollar. Who's looking really good right now.
- [44:57]
G
So Brian, I think it's the market leaders are still the ones that you want to be looking at and that's DraftKings and FanDuel both DraftKings and FanDuel Flutter is the parent for for FanDuel have been able to hold on to their market leading position heading into this football season. And I think it's a key time as we look at the next two weeks as well in the beginning of football season because that's typically this the best kind of trading window as well for these stocks, which we still think are also one of the best single growth stories in all of consumer. You mentioned that retailers ahead of the break were probably ripping their hair out or screaming. Well, this is a space that's going to have growth because fans are going to be screaming and you're going to be having more and more betting that's going to be going on for years to come. We still see a path for the overall market to actually get to a $25 billion GGR market beyond 2027. We think that on the casino side it could be a $15 billion plus market. That's over 18 to 20% growth for the next three years. Basically one of the best consumer stories out there.
- [46:02]
A
We talk a lot, Steven, about how the iGaming market, I.e. online casino games, really outstrips the profits of sports betting. But now you have all these new entrants with Kalshee, Crypto.com, polymarket on Sports and by the way, they're going to offer those trades where FanDuel and DraftKings can't. The most populous states in the nation, California, Texas and in Florida where Hard Rock and the Seminoles have a near monopoly. How do you factor in the opportunities with predictions, markets versus what already exists with sports betting?
- [46:39]
G
So we actually publish a note on this, but we talk about how this is actually an opportunity longer term for these companies. You saw that FanDuel partnered with the CME group to start launching non sports exchanges. This is something that they've already been doing for years through betfair. So they know how to do this. They'll have a complete product bets where they can not only have non sports but also all the parlay bets, all the different types of products that they're offering now. So we think they'll have a better, more competitive advantage now in those states like California and Texas where they can't currently compete on sports betting. I think this actually is a bit of a wake up call for regulators to say we may need to think about legalizing sports betting because this is money left on the table. This is basically taxes that are not being collected. In those states.
- [47:28]
B
Grasso. Any stock you like here. Yeah. So Stephen nailed it, right? So it's Flutter and it's DraftKings. Flutter has more diversified play, bigger international footprint and seasonality. Works in the better camp for DraftKings for the fall. And Flutter is better in the spring. Steven, thank you, Contessa Brewer, as always. Thank you very much. We're back right after Final trade time. Julie.
- [47:57]
C
I like Encino. This company does mortgage origination software and they reported good results in that business, which is hard to do right now.
- [48:04]
B
Encino Man.
- [48:05]
D
Mike yeah, September, usually a more volatile month, and right now S and P options are pretty cheap. So I think you could buy spy calls if you want to press a bullish bet through the end of September.
- [48:15]
B
Steve well, first of all, thank you. Thank you for being here for the last two weeks, week and a half. Are you gone next week? Mentally or physically? Both. Final trade, final trade is DraftKings. Not only AM I on the show, but I watch the show DraftKings. Thanks, Stephen. All right, thanks for watching Fast Money, everybody. Have a great long weekend. Mad Money starts right now.
- [48:40]
A
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal and their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer it's not rocket science.
- [49:22]
B
Grayscale has been educating investors on crypto for over a decade. Grayscale. Invest in your share of the future. Investing involves risk and possible loss of principle. Visit grayscale.com for more information.