← CNBC's "Fast Money"
CNBC's "Fast Money"
Apple And Alphabet Dip, China Stocks Falter, And Disney’s Whole New World 5/7/25
00:43:53
Apple and Alphabet dip after one top exec weighs in on the AI/search engine revolution. What one tech analyst sees in store for the industry, and if there’s any reason to be bullish on the group. Plus, China stocks slide despite stimulus and a rate cut, as President Trump holds steady on tariffs. And the whole new world for Disney as the media giant plans to put magic in the middle east. Fast Money Disclaimer
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- [00:00]
Melissa Lee
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes and everything in between. With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. Edward Jones, Member, SIPC Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org live from the Nasdaq markets in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight, A chip rip. Shares of Nvidia surging late in the day on a report restrictions on semi exports could soon ease what the Trump administration is working on and what it means for the sector and the Fed. In focus, Chair Powell raising concerns of the dreaded S word stagflation. What's on the central bank's radar and how do tariffs factor in? Plus Google sinks on a stark warning from Apple. Disney shares surge after surprise subscriber growth and Uber hits the brakes after its latest earnings report. We'll dive into all these trades. I'm Melissa Lee come to you live from CDP at the nasdaq. On the desk tonight, Tim Seymour, Steve Grasso, Dan Nathan and Michael Kadopoulos, Deputy chief Investment officer at Richard Bernstein Advisors. Welcome Michael. We start off with a developing story in the chip space. Nvidia shares popping in the final minutes of trade, ending the day up 3%. It comes on a report that President Trump was will end chip export restrictions. Other semi stocks like Qualcomm, Broadcom, Taiwan semi all rallying CNBC's Christina parts Neville has got the details. Christina.
- [02:06]
Christina Parts Nevels
Melissa, it's Trump nixing Biden's complicated chip rules just days before they were supposed to take effect on May 15th. Markets like you said, closely watching with Nvidia AMD, Oracle initially jumping into the close but many of them are trading lower in after hours. But really think of it more as a trade reset. Instead of Biden's three tier global system which was criticized for pushing allies closer towards Chinese chips like Huawei instead were likely headed towards targeted country specific restrictions. The Commerce Department told Bloomberg that the old rules, the Biden rules were, quote, overly complex and bad for American innovation. Nvidia CEO has been very vocal in imposing these rules here. He was just last week in D.C.
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Tim Seymour
We need to accelerate the diffusion of.
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Dan Nathan
American AI technology around the world.
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Tim Seymour
And so the policies and the encouragement from the administration, it really needs to be behind that.
- [03:02]
Christina Parts Nevels
But don't mistake this for a complete free for all, though. Trump's team plans to keep existing China curbs like requiring licenses to send Nvidia's H20 chips to China, while crafting simpler rules, potentially cracking down on countries like Malaysia and Thailand that allegedly funnel chips to China. The timing, though, isn't coincidental with Trump heading to the Middle east where Saudi Arabia and UAE have strongly opposed chip restrictions and would definitely like some type of bilateral chip deal. So this move could really smooth diplomatic war waters while positioning the US to maintain tech leadership. Melissa.
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Melissa Lee
So let's be clear about this, Christina. It would in theory open up some markets more to chip exports as opposed to the current, what was currently in place. It just the chip restrictions might be more targeted, like specifically on China, which is why.
- [03:49]
Christina Parts Nevels
Yes, 100% correct. And then that means Nvidia could be still used as a bargaining chip between country relations. And it's funny how the administration now says that it's. The old rules are complex, but now potentially it could be dealing with, you know, 20 to 200 new trade deals individually, one individual ones. That would require a lot more work.
- [04:10]
Melissa Lee
Yeah, that does not sound easier, Christina. Thank you, Christina. Parts neveless, but it would mean more chips sold abroad for the likes of Nvidia and amd, maybe a Broadcom. I don't know. What's your interpretation, Dan?
- [04:21]
Steve Grasso
It's confusing. And you could say that there's one word that is most important here is Biden. So this went into effect late in the Biden administration. And here's another thing that went into effect the last year and a half of the Biden administration, the CHIPS act, right? So you want to kill AI diffusion, right. Which kind of limits the ability for our best technology to be funneled into China, therefore funneled into their defense and intelligence apparatus. This is really a matter of national security. On the flip side of that, the CHIPS act existed, right, to reassure a lot of chip production or eventually kind of create an ecosystem here to diversify away from China as a matter of national security as it comes to manufacturing. So as far as I'm concerned, this administration's view about all of this, like advanced technology is clear as mud right now. Because this doesn't do a whole heck of a lot and it actually undermines, I think our positioning for a trade war with China. Because what is it really all about? It can't just be about trade. It is about national security too and releving the playing field as it relates to our advanced technology and not letting them get access to it.
- [05:23]
Melissa Lee
All the other goods may be for various reasons, but when it comes to chips, I mean national security should in theory be the North Star which guides all of our policy. And yet here we have a restriction lifted which sort of, you know what's going on here?
- [05:37]
Dan Nathan
Well, yeah, I'm not sure if this does simplify it. I think this is what Dan saying. I think you got a place where also if, if some countries are okay and you actually, you're on the verge of going to the Middle east, uae, Saudi, and you're saying we're willing to actually trade with you on chips. Which, you know, the simplest form of this is that American technology maybe just shouldn't get out of America. And I realize that's not an exc. Exciting thing. I mean the flip side of all this is Nvidia took a five and a half billion dollar charge. We were on the show that night, whatever three weeks ago and all that did was kind of remind us of the pressure that's been on semis for a long time. Pressure that's coming from export markets being closed off, pressure from just some of the infrastructure to actually even follow through on demand here. So I don't know what this headline really means. I do know the market liked it and I would get back to where the market was on semis even before this announcement which is that semis were leading the market back. If you think about where we are off of those really April 7th intraday lows. But even a day or two before that, semis have outperformed the S and p by almost 9% since that time. And if you're looking for market leadership, you want to see the semis move. So again, whatever you boil down where this is going, I'm not sure we know. We do know that the headline is semi friendly.
- [06:49]
Melissa Lee
Yes.
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Dan Nathan
And that is something that is market friend.
- [06:51]
Melissa Lee
More chips to be sold versus 24 hours ago.
- [06:54]
Michael Kadopoulos
But not to China. Right. So not to China, not to Russia, not North Korea. It's definitely positive to the semiconductor. But just addressing the national security issue, I don't. We're not going to be sending them to our enemies, just one and two tier.
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Ben Wrights
Right.
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Michael Kadopoulos
So all the other countries and are our absolute verified allies. So it's a benefit, it's a tailwind. But the problem is the semiconductors rallied because they thought it was a blanket approval approval. Now it's going to be a qualified approval. So not so fast.
- [07:26]
Melissa Lee
All right, we've got some breaking news. Meantime, sending pharma stocks lower in the after hours session. President Trump picking a new surgeon general nominee. Angelica Peebles has got the details. Angelica? Hey, Mel. That's right. President Trump is nominating Casey Means to be the surgeon general. Remember, he pulled his pick earlier today. And this is a big deal because it's really a Maha takeover. You have RFK Jr now as HHS secretary. You have Casey's brother Callie working with him over at hhs. And now of course, she being the surgeon general, if that goes through, this would be a total transformation and really sticking to that theme of trying to shake up health care in the United States. She and her brother have talked extensively about chronic disease and how the whole system is corrupt and there's warped incentives and that's what's driving health care. So a big deal today, Mel. All right, Angelica, thank you. Angelica Peebles, Maha, of course, standing for make America Healthy again, which is a big theme that's really sort of part of the RFK Jr. Takeover of HHS here. But you can see the reaction here. We saw the reaction also yesterday in terms of the replacement for Dr. Peter Marks at the FDA, Dr. Vinay Prasad, that was negative as well. So it just seems like headline after headline coming out of who is going to head the various health agencies. Tim, A real challenge for pharma stocks which in theory be sort of defensive in this environment.
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Dan Nathan
They should be defensive. But, but if you think about the essence of what at least is being targeted here is, is that if the pharma it seem that the pharma industry has certainly had an inside track to not only keeping competition out, but as a pricing advantages and some of it is corrupt. Again, let's go by on some of that least some of the the theory and some of the approach they've taken to policy here, then that's obviously going to be negative in terms of pharma. What we've seen also is that the pharma stocks are struggling. Some of the core names you just listed up there are ones that are struggling with loss of exclusivity. There's an element here that I think there's a, you know, it's almost like pushing the companies that are weakest right now in terms of where they have drugs that are under patent and actually seeing what you can get away with. And I think, you know, unfortunately, I think pharma stocks will be defensive. Remember, we're also in a market where for the last month and a half, actually, for the last month or so, it's really been about being offensive off of those lows, but more uncertainty.
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Tim Seymour
Yeah, yeah. I think Tim hit the nail on the head. You know, the last month has really been the comeback trade, right. And health care staples, you know, they've been, they're the leaders earlier and now they're the laggards as you get the, the rotation back to the old leadership. And you know, listen, I think as you go later into the year, if you have earnings begin to fall, if you go into an earnings recession at some point, if you go, you know, grow, economic growth continues to fall like we saw in the first quarter, you know, health care will probably still be one of your leaders. It's kind of like long term treasuries, right? Everybody, Nobody wants to touch long term treasuries at the moment. But if you go into recession, you can, you can bet your British long term treasuries are going to be okay. Health care will be the same.
- [10:21]
Melissa Lee
All right, meantime, let's get to the other big story of the day here. Shares of Alphabet dropping more than 9% at its lows of the day after Apple executive Eddie Key warned that I will replace search engines. The comment coming during testimony in the Justice Department's lawsuit against the Google parent. Steve Kovac's got the details here, Steve.
- [10:39]
Steve Kovac
Hey there, Melissa. It's not just replacing search with AI. There's another aspect to this. Eddie Q. He's the head of services over at Apple, he was testifying in this trial and he said on Apple devices, Google searches actually dropped for the first time ever in the month of April. So let me explain why this is important. Because the narrative around Google during this whole AI boom was that this is an exoskeleton existential threat to Google that people are going to start migrating more towards artificial intelligence. And Eddie Q basically said, yeah, that's kind of what we're seeing here. In fact, we're looking at other partners to play into AI search to be integrated into iOS, similar to the way they do Google. That would be perplexity or chatgpt or anthropic. He named a lot of those by name. And we got two things going on here because Eddy Q is there basically to protect this agreement that Google has that could get blown up in this DOJ case. Where Google pays up to $20 billion a year straight to Apple for being the default search on these, on iPhones. And that is one of the things that the government is looking at ending. And so that's free money up to one fifth of all services revenue coming straight from Google. That is at risk here. Eddie Q. By the way, Melissa said this is the kind of thing that's keeping him up at night because if this goes away, Apple's going to have to come up with a new solution with whatever they come up with is just not going to be as lucrative, at least right off the bat. And then on the Google side of things, this is really a test of what they can do with artificial intelligence. They have yet to prove they can monetize artificial intelligence search. They're heavily reliable or reliant rather on the traditional search method where you type in, you see all the blue links, you have to scroll through a bunch of ads that is slowly chipping away and going away because of artificial intelligence. So we'll see what Google's answer is in a couple of weeks here when they have their developers conference, Google I out there in Mountain View, California to see if they talk a little bit more how search is evolving to meet these challenges. But right now this could be one of those moments, Melissa, where we look back and say this is the day search really started to change. The day of the old blue links. The old paradigm of Google search is going away in favor of AI. Melissa?
- [12:48]
Melissa Lee
All right, Steve, thanks. Steve Kovac, our next guest thinks today actually could mark that historic turning point in sentiment, at least for Alphabet. Ben Wrights is the head of technology research at Melius Research. Ben has a hold rating on Alphabet. You made the comparison in a previous note, Ben, of Alphabet to Eastman Kodak, which certainly conjures up the worst case scenario. Are we going to look back at today and say this is the, this is the day that the market realized that that existential threat that had been talked about for so long is a reality.
- [13:19]
Angelica Peebles
It could be that day. It really could be. We compared it to Kodak in terms of the innovators dilemma where your eyes saw digital cameras coming and the digital revolution, it didn't matter if it was really ready for primetime that exact second. But you knew it was coming and then eventually it caught up with you and the existential threat did come to bore there in the worst way possible. Not going to be really the case for Alphabet because they could break up and they have a lot of great assets. But nonetheless it does remind us of it innovators dilemma. They don't really know what to do. They're experimenting here. Experimenting. There's actually nobody even knows what's going on. The regular search we think is being disrupted by AI very clearly though and they got to make a bet soon.
- [14:03]
Melissa Lee
What kind of bet do you think they should make? I mean, do you think that the disruption to regular search is much faster than what everybody is expecting now? I mean I know that when I useif I use Gemini instead of a regular search I don't click on any of the blue links. I don't go to any of the sponsored stuff that I might have gone to before in a traditional search. And I'm imagining that that times however many is the experience for many people.
- [14:26]
Angelica Peebles
Isn't it amazing? Just common sense and what you said and you know how many times I caught so much for saying that in my notes. But it's just common sense. You put an AI summary in even and it demotes links. You times that by a lot. It's got to demote the rate of return of, of the ads. And you know what I really think they need to do is make a bet and they need to say hey, this is the, this is the new way of search. This is how we see it. You know, sort of like what Apple does when they put out the iPhone. This is the new way. There's a phone and they disrupted the ipod and the ipod went away. And you know they need to do that. And you say this is the new search. This is the magic three links instead of 50 links that are useless. And this is the way it's going to look. It's crisp, it's cool. Here's a new bidding system. This is Google now. And then they have to have Google Classic which is like a Google search and that has the old ad platform and people can choose that. Maybe people my age and older. But things in this age are happening fast. They happen the fastest we've ever seen. And you just don't know me personally. I put in my estimates them getting really hit from search next year and the year after. But then a day later or something the paid clicks came out in the 10Q and we saw that paid clicks are already decelerating at Alphabet and on their conference call they said everything was great. And then you realized they increased the cost, the click charge, which we don't think is going to happen forever. If the rate of return on your ads going down, you're not able to charge more all the time to make up for the weakness and click. So I just think it's classic innovators dilemma. It's a great company. There's probably a lot of people watching it from the company right now saying I can't, you know, were amazing. But it doesn't, when you have the innovators dilemma, the best model like Gemini doesn't always win. You have to disrupt yourself and go.
- [16:21]
Steve Grasso
Ben, you could probably make the same case for Apple here. I thought was really interesting that Apple sold off when this, you know, these headlines started to hit. And you know this is a company that's been massively behind the eight ball. When you think about wwdc when they launch Apple intelligence, I mean that there was no there there. And so here we are, you know, almost a year later and I said to myself, okay, Google pays $20 billion a year to Apple for exclusive search on Safari on iPhones. They have $100 billion in revenue in services. You know, 20% of that is that payment right from Google. And you say to yourself, these guys have no strategy right now. What's, you know, when you think about innovators, innovators dilemma, let's apply that to Apple right here.
- [17:04]
Angelica Peebles
Well, I think there's a little bit of a different case here with Apple. I mean when in terms of Google they basically have to change the main product at the company search, I don't think you have to change the main product in terms of iPhone. I think people will always need a device to access AI. And the issue with Apple right now is that they created this whole services business which create, which created the pillar of the multiple multiple. And what we just said in a report today is that if services is damaged, that multiple can come in because the pillar is services. And I think that what, you know, it's about A$30 a share in terms of if that 20 went away. Now what I think Apple can do is they have a lot of things. They can launch new services with AI that people aren't thinking about and charge for it. They can get other forms of traffic, acquisition costs and benefits from OpenAI other players that are going to win and they can re up their deal with Google somehow. Now what everybody's worried about is the judge is going to say hey, it's over. No more deals with Google, no more revenue in terms of not only upfront payments but even variable payments. And Apple's going to have to make up for that and make up for that with new services, new arrangements and new innovations in services that people will pay for. They have a better chance of doing that and have shown they did that with Apple pay Apple TV plus then, then you guys may think so. I think putting it in the same bucket in Google is a folly and you know, that's what we think.
- [18:41]
Melissa Lee
All right, Ben, always great to get your take. Thank you so much.
- [18:44]
Angelica Peebles
All right, thank you.
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Melissa Lee
Ben writes of Milius. So what do you do here with Alphabet?
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Michael Kadopoulos
Yeah, I think you sell Alphabet. First of all Alphabet the first time they're below 93% of search has this is since 2015. They haven't been below. There are 89 and change. But I believe Ben's right. Probably going to fall precipitously from there. I do agree with them as well on Apple they're going to have four agreements or three agreements instead of just the one with Google. So they have a, they have a way that they could keep their 20 billion per year or maybe more. Google doesn't.
- [19:16]
Melissa Lee
Would you sell?
- [19:18]
Dan Nathan
No, not here. I feel like we had priced a lot of this in. Today's a big day. We can all decide just, you know, how momentous it will be. I do think it's very clear that we learned today that Google lost some kind of a regional semifinal match or something. In other words, or maybe that's a bad metaphor. I read a note by Steve all used, I think they called it a bake off. So it's clear that Chat GPT is, is, you know, has won an early, at least you know, beauty contest of sorts. It doesn't mean that Apple and Google still don't see each other as very important partners both because again the financial relationship. I'm sorry but does the doj. I don't know. And that's obviously what's brought a lot of this out. I think that has something to do with also the heaviness both on Apple and Google over the last week or so. But. And that's obviously where all this came from. It came from a testimony. And was he planning to say all this today? I don't know. But I do think it's a case where we've priced a lot of this into Google. I think long term that relationship with Apple and Google and Gemini ChatGPT chatbot is, is ultimately something that's still in the driver's seat. We may think it needs to get better. But I'm not so sure that Google.
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Melissa Lee
Has lost here the heaviness in tech though. Mike?
- [20:26]
Tim Seymour
Yeah, you know, I think a problem. This shows the dangers of, you know, investing in momentum mega cap growth in my view. You know, you've got customer concentration in this particular case and you know, some of the chip manufacturers case and listen, when things go bad, right, they go bad, you know to, to a large degree. And what worries me about the space in general is that, you know, you already had peaking earnings earnings on the tech sector. Earnings peaked in the second quarter of 2024. Right. It's hard to imagine when you get headlines like this plus declining earnings, how they necessarily outperform going forward. And you know, that concerns me.
- [21:06]
Melissa Lee
Coming up, details on the latest Fed's rate decision, where they are seeing the risks, what it could mean for the markets. That is next. Plus earnings around ARM Holdings, Zillow, Carvana, Dutch Bros flutter all on the move after their reports. Details in the numbers from the quarters do not go anywhere. Fast Money's back in two.
- [21:26]
Steve Grasso
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- [21:31]
Dan Nathan
Comcast Business helps turn today's enterprises into engines of modern business powering the engine of modern business powering possibilities.
- [21:40]
Steve Grasso
Restrictions apply.
- [21:42]
Dan Nathan
SQUAWK BOX Friday a special report on cargo theft.
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Melissa Lee
CNBC investigates how criminal gangs are attacking America's supply chain.
- [21:50]
Tim Seymour
They literally have a license to seal.
- [21:52]
Dan Nathan
Squawk box Friday, 6am Eastern and streaming on CNBC.
- [21:56]
Steve Grasso
Plus.
- [21:59]
Melissa Lee
Welcome back to Fast Money. Stocks riding a roller coaster after the Fed's interest rate decision this afternoon. With the S and P dropping half a percent at its lows, the central bank raising concerns over stagflation, citing a more uncertain economic outlook as well as a risk of higher unemployment and higher inflation. But major indices all rebounded off their worst levels with the dow gaining nearly 300 points, 10 year treasury yields. Meantime, back below the 4.3% mark. Let's get to Steve Liesman who's got all the headlines out of the Fed today. Hey, Steve.
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Ben Wrights
Hey, Melissa. Yeah. Fed officials maintain their holding pattern for monetary policy at that May meeting and suggested they could be on hold for a while longer until the fog from the economic impact of tariffs and other fiscal policies clear up. The Fed said in its statement that as Melissa said, the risk of both higher inflation and higher unemployment had risen. That's the stagflation problem. Even while the economy continues to expand at a solid pace, unemployment is stable at a low rate and inflation somewhat elevated. Asked whether there had been any progress on the Fed figuring out which side of the inflation unemployment mandate it would most likely need to address, Fed Chair Powell said, still too early to say.
- [23:06]
Tom Rogers
I don't think we can say, you know, which way this will shake out. I think there's a great deal of.
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Dan Nathan
Uncertainty about, for example, where tariff policies.
- [23:15]
Tom Rogers
Are going to settle out and also when they do settle out, what will be the implications for the economy, for growth and for employment? I think it's too early to know that.
- [23:24]
Dan Nathan
So, I mean, ultimately we think our.
- [23:26]
Tom Rogers
Policy rate is in a good place to stay as we await further clarity on tariffs.
- [23:33]
Ben Wrights
So the market continued to price a July rate cut with some confidence at 70% and two more cuts this year, one in September than the other one in December. But that 23 or what is it to call there on June, that just a 23% probability on a June rate cut. That shows the market hearing the Fed loud and clear. June is still too early to know how monetary policy should be steered amid the profound changes and uncertainty that's coming from President Trump's tariffs.
- [23:59]
Melissa Lee
Melissa, I thought what was sort of interesting was there's a question, I think, surrounding being preemptive. And he said we are not in a situation where we need to be pre and preemptive, as opposed to saying we would not be preemptive. We would wait to see the impact in the data.
- [24:16]
Ben Wrights
Well, the problem for the Fed being preemptive is preemptive on which side of the mandate? There was a nice quote from Jason Furman in the New York Times, who said the reason why the Fed needs to be behind the curve is it risks being in front of the wrong curve. Right. And the trouble is the uncertainty. They called it strategic uncertainty, I call it. I'm not sure if they know what they're doing. But in any event, on the tariffs, Melissa, if you go ahead and you cut interest rates because of the negative impact of tariffs, and then you have a situation where the President makes a deal and withdraws those tariffs, then the Fed could be on the wrong side or it could be on the right side, depending upon what kind of impact of inflation comes through. So I think we're just going to have to wait and see. And there's another danger here, Melissa, that is really hard to get your brain around, which is what if you have a reaction first, for example, in the jobs market, let's say those jobless claims spike or you get them tomorrow morning, or the jobs market weakens and inflation stays cool until later when the retailers and the wholesalers pass along the tariff. So you could be out there addressing the jobs part of the mandate and only later do you find yourself with an inflation problem.
- [25:30]
Melissa Lee
Right. What a pickle, Steve, Thanks. It really is. I mean, that was, I mean, I thought this pretty good use of pickle.
- [25:37]
Dan Nathan
Where did that Term come from being in a pickle. I mean, sandwich. I don't know anyway. Well, you could probably come up with better than that.
- [25:44]
Tim Seymour
You know, I think, I think we saw today that the Fed truly is a lagging indicator, number one. I mean we have to say, see all the data before we do anything. It shows that, you know, they don't really know what to do at the moment. I think Chair Powell was pretty upfront about that. The market did not tell you that there is a lot of stagflation risk. If you look at the long end of the yield curve, yields actually came down. The front end of the yield curve, yields didn't really move. That's the market saying the Fed's going to stay on hold for longer and that's going to cause long term growth and inflation to fall. Hence against the long end of the yield curve yields going down. That makes a lot of sense to me. I think they're going to have to wait to see what happens, as Steve mentioned on the employment front, what happens on the inflation front before they do anything drastic. My suspicion is they're going to hold for quite some time and then they're only going to cut once they see unemployment jump substantially and then you're going to get large cuts.
- [26:39]
Melissa Lee
Right. That's what Michael Schumacher Wells Fargo was on the desk yesterday and he said Fed back end loaded 100 basis points at the end of the year because it will be, it'll play out like that. All of a sudden emergencies cut a lot.
- [26:52]
Dan Nathan
Well, and also I guess what I heard today is I heard, I heard more tension between the two parts of the mandate than I've heard in a long, long time. Which, which tells me that, you know, if you want to believe in stagflation, I heard it as loud and clear as you could possibly have it. But Steve really communicated that that dynamic, you move one side, you might be on the other side. So again, and I think the tension between being focused on employment and being focused on inflation right now has both sides. They rose today.
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Steve Grasso
Yeah, and I thought the comment about last year the policy was restrictive or slightly restrictive and that's why they cut 100 basis points in the fall. And obviously they were worried about jobs and that was, you know, a big part of their mandate. But then he continually said that the economy is on decent footing and he said it again and again and he got asked a lot of questions about it. And I think the other way to think about this, as you're looking at it through the lens of the markets is like, you know, the policy rate was five and a half percent for two years and the stock market went up those two years, 25%. You know, the economy did not dip dramatically one way or another. Was slightly weakening over the course of, you know, the last year and a half or so. So you know, to me, I just don't know what the big rush is. Again, they are in a pickle. They have backed themselves in a. I don't think they backed themselves in the corner. I think the White House has backed themselves in the corner of the way that they rolled out the trade war. I think there was a way that could have give them a lot more clarity about the path forward to start.
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Michael Kadopoulos
Cute though. That's the easiest way. That's just start cutting, not cut off the balance sheet if you stop that.
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Dan Nathan
Because eventually when they continue, they continue to wind off 35 billion. I mean that's a fed that's feeling pretty confident, you know, about exactly tightening.
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Melissa Lee
Coming up, all the after hours action. Arm holding, Zillow, Carvana, Dutch Bros flutter all on the move after the reports of numbers from the quarters Next. And speaking of earnings, Novo Nordisk getting a bump on the back of theirs. What's in store for their blockbuster weight loss drug? And what a phase out of compounded competitors will mean for the stock. You're watching Fast Money live in the NASDAQ markets. I did Times Square back right after this.
- [28:51]
Dan Nathan
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- [29:12]
Tim Seymour
Sees your business from every angle, working.
- [29:14]
Dan Nathan
Together to deliver outcomes that create strategic value. Ey shape the future with confidence. Squawk BOX Friday, a special report on cargo theft. CNBC investigates how criminal gangs are attacking America's supply chain.
- [29:30]
Tim Seymour
They literally have a license to seal.
- [29:32]
Dan Nathan
Squawk box Friday, 6am Eastern and streaming on CNBC.
- [29:37]
Tim Seymour
I said, you want to go to.
- [29:38]
Steve Grasso
New York and see the Fast Money show live?
- [29:40]
Melissa Lee
And she said, heck yeah. A huge CNBC fan. That's why I'm here. I watch Fast Money every day. I don't miss a show.
- [29:53]
Steve Grasso
I mean there's a few shows on CNBC that I just do not miss.
- [29:55]
Dan Nathan
And that's the top of the list.
- [29:57]
Tim Seymour
This event was so important, gave us.
- [29:59]
Tom Rogers
Access to our fan base.
- [30:01]
Melissa Lee
18 years this has been on my bucket list gave them access to us. It was awesome.
- [30:05]
Tom Rogers
This was an incredible experience.
- [30:07]
Steve Grasso
The energy in that room was great.
- [30:08]
Dan Nathan
Mahalo, Anui.
- [30:10]
Melissa Lee
A dream come true.
- [30:11]
Dan Nathan
Fast Money Live get your tickets now@cnbc.
- [30:15]
Steve Grasso
Events.Com fast money.
- [30:19]
Melissa Lee
Yep, we're doing it again, so come join us. June 5th, another fast money Live event. Get your tickets right now. CNBC events.com/fast money. Meantime, Novo Nordisk shares finishing in the green but well off their highs. After announcing an earnings beat before the bell, the drugmaker reported lighter than expected sales of its flagship weight loss drug. Wegovy trimmed its full year sales forecast, but said it expects Wegovy's numbers to improve in the second half of the year as compounded versions of the GLP1 drug drug are phased out. This is sort of a sigh of relief. Everybody's worried that prescriptions in the first quarter really sort of leveled off or went lower. But they said that the impact of the compounders was actually much greater than they had anticipated in the first quarter. So you take that out of the equation and that gives the Runway for the second half.
- [31:01]
Dan Nathan
Yeah, I mean, guidance was lower, but it assumes that compounder switches, you know, are going and they're going fast. And it is a case where I think at some point you have to assess where people really just discounted Novo too much. And that's been my view and it was the wrong view for a long time. Now at this point, I think you've gotten a little bit more sense into that. It doesn't have to be all or nothing.
- [31:22]
Steve Grasso
You know, we had Zach Cortano on last week, so the founder of RO and obviously their competitor of hims, they did not have compounds they didn't offer them. This was roe. But what Zach said about the pricing of this product coming down from $1200 to full pay at 499, they've never seen, have you? There's, it's never been seen before. So the idea, you know, normally we get a little concern when you hear back half loaded, that sort of thing, but the price coming down, it might actually get more coverage. Right. Of these drugs, that sort of thing. And you could see volumes go back up. So I'm with these guys. I know guys been talking about it too with the Novo. It seems a little de risked here.
- [31:57]
Melissa Lee
I mean, even with less coverage, the price coming down more than compensates for, I mean, in terms of making it much more accessible to a wider group of people. Cash paying attention for the drug. I mean, when, to your point, when have you ever seen a product of a product that everybody seems to want to get a hold of deflating at this rate in a matter of a year or two.
- [32:16]
Michael Kadopoulos
Yeah. When you the obvious comparison is is Eli Lilly and Novo. And when you look at them on a chart, Eli's is a little more frantic or volatile if you will. But if you go back on Novo to November and December of 2022, this is where the stock should bounce. That's where we bounced recently. If you want to play the catch up trade, you go with Norvo. If you want to go with more consistent even though an erratic chart, you stay with Lilly.
- [32:39]
Melissa Lee
Coming up, a whole new world for Disney, literally. The media giant soaring after its earnings beat this morning. And it's not just subscriber growth and guidance exciting investors. We got the details and Fast Money returns. Welcome back to FAST money. Stocks closing in the green after the Federal Reserve left rates unchanged but noted rising uncertainty and a risk of stagflation. The dow climbing nearly 300 points. The S and P up almost a half a percent. And the NASDAQ climbing about 3, 10 of a percent. China stocks getting hit even after Beijing announced a slate of stimulus measures overnight, cutting interest rates, reducing bank reserve requirements. The K Web for instance down 2 and a half percent. And some more after hours action. AAM holdings beating top and bottom line expectations. The outlook though falling short of estimates. Carvana and Zillow both beating on EPS and revenue expectations flutter. Entertainment missing top and bottom line estimates. And Dutch Bros. And Skyworks both topping earnings and revenue expectations. The stocks heading in different directions. Tim, just quick on China, what's your take there?
- [33:40]
Dan Nathan
I don't know. It's easy to say. The expectations on what they did in terms of stimulus were not enough. I think some of this really is also just against a market call where I think International's outperformed so much. I think there's been a little bit of give back. I think some of the dynamics here as you get a better at least a little more clarity on tariff, I think that's what it is. I still like Bobby here. I don't change my view.
- [34:00]
Melissa Lee
Meantime, Disney soaring after reporting strong EPS and revenue numbers before the bell. The Entertainment giants Key 1 results boosted by strong subscriber growth. For its streaming service Disney plus, the company added 1.4 million new users bringing its total to 126 million worldwide. It also announced it will open a brand new theme park in Abu Dhabi, though it did not say when that park will open. For more on results, what is next for the Magic Kingdom let's bring in CNBC founder and Target Media chairman Tom Rogers. Tom, it is always a pleasure to have you here on set.
- [34:29]
Tom Rogers
Great to be here.
- [34:31]
Melissa Lee
So subscriber growth, profit growth in the streaming business. I mean it shows that integrating Hulu, integrating sports content into Disney plus that is working. Are you more of a fan these days?
- [34:43]
Tom Rogers
Well, you got to give them hats off on the numbers. And you got to say that the parks really did perform against an environment where travel seems to be slowing down, particularly international travel. And Abu Dhabi and new cruise ships is a big deal. And as I said here before, huge deal that Disney is the first legacy player for its streaming revenues to exceed its linear revenues. Okay, I like it. I feel big, but I don't love it. And there is a big but. Okay, because saying their streaming subs were strong at 1.4 million where they got a whole lot more headroom for growth than Netflix does. And Netflix grew 41 million over the last 12 months. That is not strong performance. In fact, for the first six months of the year, Disney plus is down. Well, I shouldn't say that they were down last quarter. They're under a million subs for the first six months. Now Disney needs a catalyst on the streaming side market. Why? Because it's not just sluggish growth. Their DTC advertising, their streaming advertising was sequentially down 13%. We have a massive reallocation of advertising revenue going from linear television to connected tv. Hulu is a granddaddy of advertising supported streaming and they're down 13% sequentially. You have the further issue that those sub gains, which were obviously modest, came off the back of a 299 promo for Hulu and Disney plus for four months against a typical price of 1099. And a lot of those subs are subs that are packaged into the charter other cable bundles where people get it but they don't watch it. And they do have an engagement issue on their original television production. Believe it or not, the number one performing show on Disney plus is Bluey. Nine percent of all that. Yeah, but it's an acquired program. Now. Their Disney films do really well, but the Disney originals don't. So they do need a catalyst. I think this ESPN flagship announcement next week which will talk about price and a new name but more importantly has to talk about the bundle with Disney plus and Hulu and the bundled pricing because there is an opportunity to create an all family sports kids show adult programming in one package. If it's truly integrated with a great interface and great recommendations. They could really catalyze their streaming business, which I don't get real excited about based on these results.
- [37:20]
Dan Nathan
So, so, so, Godfather, I think you just said it. And I would just get back to the operating income of this quarter that was better than expected. Which means that ultimately the profitability of the business that had been lacking for so long in a backdrop where, okay, we know linear TV's dead. We know the, you know, we know that the bundle has been. Has been broken, but it's been repackaged. I think it feels like you just said it. We're now could be looking at this company a little bit differently now that they can be profitable in the core business. In fact, I would argue that the biggest impediment to Disney's share price right now is fear on the economy and just how exposed Parks would be and then the advertisers. I mean, at the end of the day, it is a cyclical business business.
- [37:57]
Tom Rogers
Well, remember where we're coming from, though, we're coming from Disney being the kings of the cable business, where cable programming services had margins of 45 to 55%. And the streaming business, it is profitable, but the margins are nowhere near that now. The CFO said, well, there's some cost opportunity to expand margins along with their revenue growth. I question that a bit. They're going to have a massive allocation of cost based on these big sports rights, which are now going to increasingly show up as cost on the streaming side of the equation. Plus, they're going to need to spend a lot of money on local programming for international distribution, which is where they're really lagging on the streaming side relative to Netflix. So I think they got a long way to go on the margins to really be in a position that we're recreating anything close to the former business. Shouldn't say former current linear business.
- [38:52]
Melissa Lee
Tom, it is always great to see you. Thank you. Tom Rogers, AKA Godfather.
- [38:57]
Dan Nathan
The Godfather, of course.
- [38:58]
Melissa Lee
You'd be the founder of cnbc. I mean, by the way, Guy is.
- [39:01]
Steve Grasso
Texting me right now. Oh, yeah, Stud. He said to call Thomas stud. That's why I'd be really.
- [39:08]
Tom Rogers
I've never heard that before. That's remarkable.
- [39:11]
Melissa Lee
So we know the answer that Tom would give. Would you rather Netflix? Okay.
- [39:15]
Steve Grasso
He's been saying this on the show for 10 minutes.
- [39:17]
Melissa Lee
How about you? How about you?
- [39:18]
Ben Wrights
I.
- [39:18]
Steve Grasso
Price is really interesting is the stock is the exact same spot it was 10 years ago. And you know, when someone like Tom has never, ever retreated from that bullish. I mean, you got to find the growth. The last thing you know, for me, the fact that they went out on a limb and raised guidance for the year, I just find that really odd given all the uncertainty. But again, maybe they have a lot of confidence in the numbers they gave.
- [39:37]
Tim Seymour
Yeah. What I worry about is just the discretionary aspect, the cyclicality of sort of the business model. On top of that, you know, content, this kind of a commodity at this point. And, you know, if you end up going into, if you have an earnings peak now and that starts to slow and the consumer starts to. So we all know what's going on with consumer confidence and some of the discretionary stocks. You know, I could have, could have a problem in the sector.
- [39:58]
Michael Kadopoulos
If I look at the stock on a chart, it does this often. It spikes higher, then it runs for a couple of days after that original spike, then it rolls over. I think you got about another 10 to 15% to the upside. I'd rather you asked Dan. So I'm going to, to chime in. I'd rather buy Disney here versus Netflix at all time.
- [40:14]
Melissa Lee
Highs coming up. One rideshare down, one more to go. How Uber is faring after its earnings report. What it means ahead of Lyft's results tomorrow. Stay tuned. Welcome back to Fast Money. Uber dropping today after reporting mixed first quarter results. Before the bell. The ride hailing company beating earnings estimates but coming in light on revenues. CEO Dara Khosrow Shahi calling autonomous driving tech the single greatest opportunity for the company. Uber now has about 100 robotaxis operating in Austin, Texas. The stock has outperformed rival Lyft, which reports tomorrow substantially this year. Lyft. So no, you're not adding it to band. I take it land. I mean, can add Uber and go bond.
- [41:02]
Dan Nathan
Yeah, I'm trying to think. I mean, we're playing Wordsmith here on the fly, which I'm usually better at. But I mean, I'll stick, I'll stick with a view that Uber I think is attractive here. I do think the Robotaxi dynamic, it's amazing that at one point this was going to be the death of Uber and now it's, you know, the platform that helps them live on. I just think Uber some of the parts truly now when you look at the core businesses, makes it interesting. There's a lot of headwinds from the economy that could really knock this stock down. But until we get them, the stock is valued attractively.
- [41:33]
Steve Grasso
You know, it is the battle in guy's tube.
- [41:36]
Melissa Lee
Okay.
- [41:37]
Steve Grasso
Right.
- [41:37]
Melissa Lee
Yeah.
- [41:38]
Steve Grasso
Or it's the U.
- [41:38]
Melissa Lee
No It's a U in tube.
- [41:40]
Dan Nathan
Well, Uber, whatever.
- [41:41]
Melissa Lee
Uber.
- [41:41]
Dan Nathan
Starting with we're having trouble with soda. Trying to acknowledge we're having trouble with words.
- [41:45]
Steve Grasso
I don't know why I was thinking of his baba. Because you just said that that is the B in his tube.
- [41:48]
Melissa Lee
That's the B in the tube.
- [41:49]
Steve Grasso
You know, he's.
- [41:50]
Dan Nathan
Last night, he's like staying his tube right now.
- [41:52]
Steve Grasso
What's that?
- [41:53]
Melissa Lee
He's all over his tube.
- [41:54]
Dan Nathan
Your hands are all over his tube.
- [41:55]
Melissa Lee
Big fan of the tube. Sorry.
- [41:57]
Steve Grasso
So guy was cautious into the print. I mean like for a whole host of reasons. There's like to your point that it was meant to be Robotax, back to the death of. I'll just say this. If you listen to Dar and you listen to him talk about the opportunity you want to get behind this guy because they are in the pole position to do that. Even Waymo had a deal with them. Right. To get your self driving car through that. So I think Uber is going to be just fine. I just, you know, chasing in here is probably not great.
- [42:18]
Melissa Lee
It's amazing to think that some people or many people believe that Robotaxi would be very negative for the Ubers and the Lyft world.
- [42:25]
Dan Nathan
Absolutely do that. I mean that's, that's.
- [42:27]
Melissa Lee
You think it's.
- [42:28]
Steve Grasso
No, I don't.
- [42:29]
Melissa Lee
No. Right.
- [42:29]
Dan Nathan
I think I'm agreeing that absolutely there are people. That's all we've heard about.
- [42:33]
Melissa Lee
It's easier to acquire hardware, I would, I would argue than to build out this platform that has very sticky customers that are, you know, this ecosystem that's already.
- [42:41]
Dan Nathan
Well, and again, this is all reason. I don't need to tell Dan this. Isn't this a reason why you'd be selling Tesla here? Because I mean, ultimately this is. It's not about the hardware and although the Tesla folks would tell you it's not about that hardware either. Although again, I do think it's also.
- [42:56]
Steve Grasso
A bit discretionary though right now. If you think of the Uber, I think that's worth keeping an eye on.
- [42:59]
Melissa Lee
Coming up, some retailers looking for ways to skirt Trump's tariffs. The name seeing some strength and hopes of relief. The details of Fast Money returns. Welcome back to Fast Money. Some retailers showing strength in today's session. Nike, Capri, Lululemon, all higher. Steve was actually flagging this. There has been a report that the group has been asking. Asking for tariff exemptions at this point.
- [43:25]
Michael Kadopoulos
Yeah. Look at how many tariff exemptions China has put on. 24 products, 30 products, 50 products, whatever that is. We see President Trump has scaled back on a lot of his stuff as well. He's, he's one day it's on, one day it's off. I own Capri, I'm staying long. Capri, you're going to start to see this pop. Nike popped a lot of these footwear or apparel. People are thinking that maybe he's there, he'll, they'll pull back and maybe it's a softer approach. So that's why I'm staying long.
- [43:53]
Dan Nathan
Yeah, I like Nike here and again, I like it here. I mean, this is a case where we've every time there was talk about tariffs for even before Independence Day, Nike was getting knocked down. And I realized that there were some issues at Nike specific, but those were last year's issues. So I look at them relative to their peers. You didn't ask me so I'm not going to do this, Mel But I look at the rally back in a deckers and an on on and I see that Nike's done nothing. And I think those companies all have issues with discretionary spend. So in this way world Nike so much more attractive because we've priced in a turnaround that I'm not sure is as bad as people think.
- [44:25]
Melissa Lee
Quickly, Michael, how do you feel about retail?
- [44:28]
Tim Seymour
Yeah, I mean, I think retail is potentially in for some trouble over the longer run, medium to longer run. You know, the last quarter is going to be good, right. We're not really going to know until the tariffs really hit and we'll see what that does to the consumer, what that does to margins, etc. But for now, probably okay. But as you look out over the next several quarters, I'd be cautious.
- [44:48]
Melissa Lee
Up next, final trades, final trade time.
- [44:58]
Tim Seymour
Michael Kantopoulos, Earnings are peaking. The Fed is tighter than expected. I think Staples stocks are going to do well for the balance of the year.
- [45:06]
Melissa Lee
Tim Seymour, nice having you.
- [45:08]
Dan Nathan
Michael. Nike, I actually think 20% of the that move, that last move was all tariff related. If you get any relief.
- [45:16]
Melissa Lee
Steve Grasso, Capri Dan oh, apple folly.
- [45:20]
Steve Grasso
Or not, I think they got an innovator's dilemma there. I wouldn't be buying it.
- [45:25]
Melissa Lee
Oh, all right. Thanks for watching Fast Money. See you back here tomorrow. Mad Money with Jim Cramer starts right now.
- [45:32]
Tim Seymour
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of cnbc, NBC Universal, 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.
- [46:00]
Melissa Lee
CNBC nor its affiliates and or subsidiaries.
- [46:02]
Tim Seymour
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.
- [46:12]
Melissa Lee
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Tom Rogers
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Melissa Lee
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Tom Rogers
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