← CNBC's "Fast Money"
CNBC's "Fast Money"
Consumer Crunch Intensifies… And International Opportunity 5/11/26
00:43:20
Cracks in the consumer seem to be widening, as retail takes a leg lower ahead of the group's earnings reports. The names pulling the XRT retail ETF lower on the back of its 3-week losing streak, and how the Fast Money traders are positioning in the names ahead of the results. Plus Netflix shares get chilled, Copper shines as the metal closes at a record high, and the semi testing company that’s quintupled over the past year. The CEO joins the Fast Money crew to dig into what makes the company stand out. Fast Money Disclaimer
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Narrator/Announcer
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Melissa Lee
Live from the NASDAQ marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. The consumer crunch intensifying as retail goes belly up with names like Target, Dollar General, Ralph Lauren and Home Depot all getting hit with earnings just around the corner. Can results revive these stocks or will the group get left out? A checkout plus Netflix takes a bingeing beat down. Dr. Copper makes a house call with prices on the rise. The semi testing stock that's quintupled over the past year and charting overseas. A top technician takes her technicals abroad. The opportunity she sees in the international trade and emerging markets. I'm Melissa Lee, come to you live from City of Be at the nasdaq. On the desk tonight, Tim Seymour, Dan Nathan, Guy Diamond, Katie Stockton, founder and managing partner at Fairlead Strategies. Well, stocks ended the day marginally higher with the S and P and NASDAQ closing at fresh records. But not every sector taking part in this record breaking rally. Check out retail. The group getting hit hard today. The XRT down over 3.5%. Riding a three week losing streak into today's session. All but five constituents in that ETF ended in negative territory. Target dropping over 5%. Dollar General sinking nearly 8% for its worst day since August 2024. Ralph Lauren off by more than 4% and Home Depot down almost 2% now at November 20 lows. All of this as we are waiting for Q1 earnings from retail which start next week with the aforementioned Home Depot Target and Walmart. So will the commentary from these companies about energy, food prices. Potential shopper added stress to an already crunched consumer. What do you think, Guy?
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Dan Nathan
I think you're going to hear that for sure because there's no reason for them not to say that, number one. Number two, I think they're telling a bit of a story here. We had a call, I said Home depot at a 52 week low. Tim corrected me correctly and said it's actually a multi year low. That to me is somewhat problematic and it speaks to a consumer. Despite what you hear, that's not in the great shape that I think a lot of pundits want to make you believe they are.
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Guy Adami
It's interesting too because as we get into Walmart and even Target, I mean the bar is high and I know it doesn't sound like it's high for Target, but I mean, and I know Target's had a tough couple days but is up almost 30% year to date. Walmart's trading anywhere from 40 to 43 times depending on your number. And the street is comfortable keeping them up here at this multiple because of technology, because of their grocery business. It provides a lot of resilience, but it's just fascinating. Meanwhile, discretionary. Talk about being early for a trade. I thought like three years ago we were going to see the move that we've seen in names like Anon and Lulu and whatnot. And at one point after being short, I covered Lulu way too early. My point is discretionary looked like it was going to topple a long time ago to me on fundamentals that are the same ones that we have today. It hasn't been that way. But if you look across apparel and you look across Athleisure and you look across a very, I think competitive space there, I, I, I don't think you're going near those names. Lulu continues to set new lows. And remember a lot of these names were going into this downdraft at, at, at margin profiles for their businesses that were extremely high. They're not going to hold them.
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Mike Slesser
Yeah.
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Tim Seymour
I'd point you to the banks though. You know, we heard from the money center banks. Feels like a month, it was a month ago. Right. And all of them talked about the resilience of a consumer. But you know, at that point we hadn't seen oil climb to the prices that it's been for as long as it's been. So it's, it'll be interesting to see if we see any of those companies kind of update that view and then on the flip that is if you look at like Capital One and we've been talking about this, if you look at American Express and those are different ends of that K shaped and neither of those stocks act particularly well. Right. And so when I think about what's been going on in the labor market, you know, we've seen a lot of layoffs in areas where it's not blue collar, it's not lower earners. These are white collar jobs at big tech companies and some big industrial companies and they're kind of speaking to AI for all intensive purposes. I know that that's not something that a lot of folks are out there think politically makes a lot of sense. But if that's where you' starting to see a lot of job cuts, that's where you could see some pressure on a higher earning consumer. And make no mistake about it, I mean the wealth effect from the stock market is certainly helping that upper sort of K. Should I stop saying the K thing?
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Melissa Lee
It's fine, yeah, I mean KK well
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Tim Seymour
let's not do it three times but you know, I mean that's something that could actually end up avoiding or kind of really weighing on the higher earnings.
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Melissa Lee
I mean GM just today announcing that it's going to be laying off 500 to 600 salaried workers because of the reorganization of their IT department. You got Cloudflare, Upwork, Coinbase, PayPal, all citing AI as reasons behind their cuts. And these are all salaried workers here. So you gotta wonder when is that going to start to trickle in in terms of even just the mentality of the consumer feeling whether or not their job is safe. As for the consumer discretionary, I mean it masks, that index masks a lot because of the presence of Amazon and Tesla. So if you took those out, it's a totally different picture.
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Katie Stockton
It's really very diverse and when you compare it to the staples so XLY divided by xlp, you don't see much. It's not that informative because it's really a neutral bias. So I feel like this tug of war doesn't tell the whole story, which of course is that the discretionary space is quite weak once you dig under the surface. If you look at that XRT etf, the retailers, they look a bit like the early stages of a head and shoulders top formation. So we'd need to see downside follow through for that to be confirmed. But the momentum is obviously poor. It is somewhat nice to not talk about the semiconductor sector though, I have
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Dan Nathan
to say, you know it makes sense. We'll bring it up tonight. But you think about consumer confidence and I think part of the reason why consumer confidence is as poor as it is, one, because inflation is still a problem. Two, with things you just cited, people are worried what AI is going to do in terms of their job security. And I think that's a valid argument right now. We're clearly not seeing it in the jobs numbers, but it's just a matter of time before it finds its way in. But I do think it's made its way into the psyche for sure.
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Melissa Lee
I mean Memorial Day is around the corner and you know what happens around that?
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Dan Nathan
You tell me.
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Melissa Lee
Drive places and that's when you're really going to feel it at the pump. When you're driving long distances, you're paying 450 a gallon or maybe higher by that time.
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Guy Adami
I don't think there's any question that that's starting to feed into to people. And what we heard from the energy companies too is that they think that energy, they think that gas prices are going to be 50 to 75 cents higher a year out the road. What we're hearing also just from the analysts on the street in terms of the oil industry, there's no question that if we got the straits to open, we've done all this math. Rates, excuse me, oil prices and therefore gas prices are staying high till, till the end of the year. We talked about the labor market. It's been actually remarkably stable to this point. And I think you're right to be getting into the confidence factors. I just think it really is a case where there's so much that people don't need to buy. There are needs versus so necessities versus kind of that discretionary purpose purchase. And I think that's really what it's boiled down to. It's also interesting to me like a name like TJ Maxx, that was one of the great charts, one of the great success stories in retail for a long time that charts rolled over. I mean that chart's now through the 200. That was, that was as, you know, as great of a chart as you could have seen. I think the real test will be Walmart's going to have great things to say. But I would just get back to the big box stores. I mean that that is in the hard lines that that's where you're going to see if there's any chance that the market wants to sniff out the leadership starting.
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Melissa Lee
I mean, I think a question for Walmart is should it be trading More expensively than an AI company? More expensively than an Nvidia? I don't know.
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Tim Seymour
Well, I think there's so few places to go right now in retail and I think that's been a very consensus trade. Right. So when you think of that valuation, I think that's a big part of it. It's just, you know, these guys are just mentioning all these stocks that are making 52 week lows.
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Jim Caron
Look at Best Buy.
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Tim Seymour
I mean Best Buy sells a lot of stuff that's also in Walmart. Right. And so a lot of these companies are just, I mean we just saw earnings growth x retail that was really good. I mean we went into earnings season and expectations were for like mid teens EPS growth year over year. I think it came in at like 18 or 19%. So for all intents and purposes, either margins are doing really well at the expense of consumers or at the expense of other businesses that don't have, you know, the pricing power or we're about to see what looks like a really interesting barbell approach to very crowded names like Walmart, which does look like a semi, but there's very few that look like that in the sector.
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Katie Stockton
You know, I think we don't want to see these names fall below their 50 day moving averages in general and targets. The most recent example following TJX and at Walmart could be next. I think it's information right there where I wouldn't even put them in the same category as tech at all in the way they look or the way they've been behaving. But when you see that 50 day moving average taken out, it's a very simple and straightforward gauge of a loss of intermediate term momentum, not just short
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Dan Nathan
term commentary around a lot of these things. I go back to the domino CEO but heard from Shake Shack. I mean there's concern around the health of the consumer without question. I mean we had people talking about consumer sentiment that mirrored what we saw during COVID which is obviously problematic. Tjx on the 20th. Tim is right. Over the last couple of weeks it's had a sharp decline. It's been able to get itself off the map. But if people start looking at valuation, they're going to start looking at this a lot more close.
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Melissa Lee
And what did Nintendo announce today? Price increases for the Switch console because of memory price increases and tariff impacts. So it goes from 450 to 500. It's a big deal, a big percentage,
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Guy Adami
especially for a gamer like Guy. I mean, I mean, you know, you don't have a lot of that's a
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Melissa Lee
small price for a big gamer like Guy because it's going to put so much use into the console.
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Guy Adami
Nintendo's also suffered from just this age segmentation and we can really choose who are the either the folks that are too young or the people that might be a little too.
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Melissa Lee
A lot of these things are going to be more expensive for consumer who does not want to pay more or cannot Pay more or PCs, phones or consoles.
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Guy Adami
I think there are places where as we've seen there are brands that are able to carve out their space. It's fascinating too because you know Starbucks has actually done okay in here. Right. We got a nice guide out of Starbucks and a resilient just outlook in terms of where they're going. I think those brands that have that ability to hold the consumer. You're going to pay for your coffee.
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Tim Seymour
Yeah, last thing, I mean we don't even mention tariffs.
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Jim Caron
Right.
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Tim Seymour
We're going to talk about the President going to China but this is a real one, two punch if you think about like really what's happened here. We've been talking about who eats that tax. Well it looks to me that the consumer's eating especially when you kind of figure out what's going on with earnings and it's been that way for a couple quarters here.
- [11:34]
Melissa Lee
For more on the markets let's bring in Jim Caron. He's the chief Investment officer of Morgan Stanley Asset Management's Portfolio Solutions group. Jim, great to have you with us.
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Jim Caron
Thank you.
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Melissa Lee
Are we all being too Debbie Downer about the consumer? I mean is this something that you're concerned about or you think everything is fine because on at least at the headline level it's not showing up in the data.
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Jim Caron
Yeah. So look, we always have to be worried about the consumer because it's such a large part of gdp. I have a slightly more optimistic outlook. So look, I know gasoline prices are high. That's going to weigh on the consumer. But as you're pointing out it's not really showing up in the data. So the other thing that we have to look at is jobs. Jobs is going to be a very very big part of this. So we can look at the non farm payrolls data. I prefer to look at the weekly jobless claims. The weekly jobless claims I think has just a better signal that's been rock solid. Now when we think about the consumer overall we also have to think of two segments and I like to break this down into two parts of gdp. One's the capital share of GDP So that's a lot of the white collar work and then one's the labor share of gdp. The labor share of gdp, which is the majority of people is actually really strong right now. So try to get an electrician to come to your house, try to get a plumber to come to your house, try to get your car fixed, right. There are help wanted signs everywhere and these are relatively high paying jobs and I think that's flying under the radar.
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Melissa Lee
Why are you grimacing?
- [12:52]
Dan Nathan
Well, because last week Tim brought up that I'm on one of these websites
- [12:55]
Guy Adami
because he's job stacking. I mean look things at fast money, you know, I mean look, you gotta, you gotta always do. And I'm just getting things.
- [13:03]
Melissa Lee
So in terms of, in terms of the capital share, I mean we see all these headlines, is that, do you think that's going to eventually show up? Because if AI is going to be worth the money, it's going to, should save you money on labor, theoretically.
- [13:16]
Jim Caron
So ultimately higher productivity. But it's also going to, I think personally, you know, I, I think is going to create a lot of jobs. There's a lot of opportunities. It's something called the Jevons paradox, right? You know, where things get cheaper so therefore you need more of it, you know, you can just do it more efficiently. I think a lot of that is happening right now. So yes, there is a transition period. Things are going to start to hurt and you're going to see the headlines that are going to come out. But ultimately I think that, you know, on, on a longer term basis, what the markets are telling you is that we're going to look through this and there's going to be a lot of creative destruction. And that's a really big theme right now for us.
- [13:50]
Dan Nathan
Jim, when did 10 year yields start to hurt?
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Jim Caron
475 in my opinion. So it doesn't mean that we don't notice it if 10 year yields go above 450 because it's a, it's kind of a nice even number that we like to look at. But I think from a cash flow perspective, when I do kind of cash flow analysis and come back to present value at 475, I start to look at some of these valuations and some of the valuations aren't so bad, but it still starts to make it a bit more challenging. And if you start to make progress to that level, people are going to start talking about 5% and then it can get take on a life of its own.
- [14:23]
Tim Seymour
Jim X Tech, you just said you're generally optimistic about a consumer. Where do you go? Because we know that tech has been driving a lot of the performance, a lot of the EPS growth that we're seeing year over year.
- [14:32]
Jim Caron
So I think it's pretty broad. Right. So we tend to think of things in terms of themes like where is the money going? Right. And we try to get ahead of the money, we don't want to follow the money. Right. So there's a lot of capital, there's a lot of changes that are taking place. Areas that we like are financials, but primarily in the regional banks, healthcare. Right. So mainly the managed care sectors. I like looking at value companies that are using AI to unlock operating leverage. Right. So there's a lot of companies out there, traditional value, old world industrial companies that are doing that really, really well. Caterpillar is an example of that. Right. You know, so we can look at that as a stock that's done really, really well. And a lot of it's because they're using a lot of that technology. So is it a growth stock, is it a value stock? The lines are pretty blurred. So we're not looking at any one particular sector, but we are looking company specific and we create thematic baskets to express these views in our, in our strategies.
- [15:27]
Melissa Lee
And you're using oil as a hedge.
- [15:29]
Jim Caron
Oil's a hedge, right? Because look, I mean, if things come unraveled, oil's going higher, right. So bought in this last dip that we had, we bought some oil futures and we just figured, look, you know, if we can't get to an agreement, those prices are going to go up. But just like any hedge, if it starts to work, you don't own enough of it. It can at the margin hedge of the portfolio, but it can definitely reduce the volatility in some of the wonkier periods of time.
- [15:54]
Melissa Lee
Jim, great to see you. Thank you, Jim. Karen, what do you think of that as a hedge oil?
- [16:00]
Guy Adami
I think it's a fascinating dynamic, although I just worry whether at this point. First of all, you've already seen some of the energy names give back something. I think there's a consensus view that oil prices remain high till the end of this year, but then they're going to go back to, I'll call it 15% north of where they're going to go. I don't think you're going to see the kind of response out of energy stocks as a straight hedge. What Jim and his group do is fascinating. There are different periods where thematically you really can navigate a market like this. That's over its skis in some places. I think what we saw with this market near the bottom, remember how we were seeing that individual, individual stocks were really underperforming on the way down. It was the last 5% or so of the market move. That was really great to use index hedges, whether they be triple qs or hedging ETFs. I think we're in an environment right now, whereas we've seen individual stock performance is really the underperformance. And I'd be careful about trying to match with indices.
- [17:01]
Dan Nathan
Yeah. And I'll go to the bond market. You know, 4.4%, for whatever reason has been this, this line in the sand where the administration starts saying things to sort of assuage the concerns that are out there. And it's worked. But here we are back at 440 again, and Jim mentioned four and three quarters. I think we're going there now. Maybe we're going there for the right reasons. Maybe we're going there because growth is better than people expect. That might be part of it. I think the bigger part of it is the inflation concerns.
- [17:25]
Melissa Lee
Yeah.
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Tim Seymour
You know, Caterpillar's a name that's, you know, often used as a big beneficiary. Listen, every company that we know of is going to be a beneficiary. The question is, what is the cost right now to get up to speed, to use this technology? I mean, we're seeing token pricing go up with consumption. Right. And he just used Jevons Paradox. I mean, right now it's expensive and it's exploding. Right. The cost right here. So you gotta be able to get that return on investment at some time really soon. These stocks are being rewarded for that right now. And when you think about, like Caterpillar in particular, their power and energy segment, like, what do you think's going to be the most demand right now off a really small base or at some point in the future once they've already met a lot of this demand? So when I look at a lot of stocks like, like this, it's a great narrative, but the pull forward, at least in the price right now, is dramatic. And I think that the valuations that we're talking about this, this stock has never traded like that. So if you're going to actually put. We saw this 30 years ago, okay. We saw this when a lot of these companies started talking about the Internet and what was going to mean for their business. And then the old economy stocks joined the new economy stocks, and then it was all over. Because everything got silly and this is like an example of that right now.
- [18:35]
Melissa Lee
Meantime, let's get to copper that's been on a tear, closing at a fresh record high now up almost 11% in just the last week. The rally extending to the copper miners, MMG Faraday Copper, Capstone Copper, Southern Copper up double digit percentages over the past five sessions. Katie, what do you see in the charts here?
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Katie Stockton
I think it's a breakout underway and it feels like part of the broader sort of commodity bull cycle to us. We feel that we can see upside follow through for copper, especially if it gets to an actual new high based on the generic and there are no signs of upside exhaustion. So we're trying to respect the very meaningful long term momentum shifts that we've seen in that area. That includes crude oil which has a long term momentum buy signal. And if we dial back to yields, they also are on the verge of that same signal. So the charts would definitely enhance what guy is saying there with the yields potentially moving higher just in this longer
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Guy Adami
term slow shift commodities super cycle for sure. Sure. And I know it seems like all we do is talk about gold and silver and things like that. How about iron ore? How about every part of the crb, Ryan? How about all types of feed inputs and yes, copper is inflationary and it is Dr. Copper and BHP and Rio Tinto if you want an integrated miner. Those are great charts. They're breaking out. That Copex ETF is breaking out. Emerging markets. We're going to have a great conversation about this. I'll save it. I'll just say there's certain parts of the world that produce a lot of copper and they are in Latin America. So I think, I think we've seen this trade before and I think they go together and I think you can find different pieces.
- [20:10]
Melissa Lee
Coming up, a CEO snub. President Trump being joined by CEOs of some of the largest companies. But there is one notable name that apparently didn't make the cut. Got more on that next. Plus a binging beat down as shares of Netflix continue to slide this month last the traders at the stock can bounce back or if the streaming giant has more room to fall. Don't go anywhere. Fast money's back into.
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Melissa Lee
Tennessee 2012 what made you confident that you could do something that hadn't been done before? I have no fear of failure.
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Narrator/Announcer
Trailblazing women, Changing the game One of
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Katie Stockton
my favorite pieces of advice Think about what your boss's boss needs.
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Melissa Lee
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Megan Casella
It really does come down to just trusting yourself.
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Melissa Lee
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- [21:35]
Melissa Lee
Welcome back to Fast Money. Who's who of CEO set to join President Trump on his trip to China for a meeting with Chinese President Xi Jinping Elon Musk, Tim Cook, BlackRock's Larry Fink, Boeing's Kelly Ortberg among the biggest names there. But there is one surprising omission or Megan Casella is naming that name. She's got some details here. Megan
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Megan Casella
hey Melissa, you might remember our Jim Cramer had none other than Nvidia's Jensen Huang on Mad Money last week. And when Jim asked about the China trip, Jensen was a little coy. He said he'd let the president announce his decisions, but that if invited, he said it would be a privilege and a great honor to represent the United States and go to China with the president. Now, though, the list is out and Jensen Huang is not on this list. And remember the timing this trip comes as Nvidia is awaiting approval from the Chinese government to be able to sell its H200 chips to Chinese firms. The US government formally gave the green light back in January on that, but China has reportedly been blocking its companies from buying the chip. So would you would think be a lot to talk about there. Now if you take a look at this list again, a range of industries are represented here. Micron and Qualcomm from the chip space, as well as Citi and Goldman, MasterCard and Visa Cargill here as well. The expectation is that each of these executives may be signing some sort of an agreement with China, but we don't have much by way of specifics on that. As of now, the White House is saying simply to expect deals in the aerospace, energy and agriculture cultural industries to come out of this trip.
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Melissa Lee
Melissa all right, Megan, thanks. Megan Casella on, on that big trip, do you think that it says something about whether or not Nvidia will actually be able to export to China?
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Dan Nathan
No, I personally I don't think so. I mean I don't know why there's this omission but I don't think it's a tell. On way Nvidia's trading and Tim's been talking about it, certainly the market doesn't seem to care.
- [23:18]
Guy Adami
Well, it's a tell though because Nvidia was very much a part of the Middle east trip in May of 25 when it was all about securing investment for all we talked about was like sovereign and where that was really you were starting to see a lot of follow through. So I think it's very complicated with Nvidia I think it might be a lot easier to have conversations because let's face it, what is China most concerned about? Yeah, you know, oil and stuff like that and what's going on. It's all about supremacy of the Internet and technology and innovation. That's all they care about. And Nvidia is complicated right now?
- [23:51]
Tim Seymour
Well, I think the whole thing is complicated. Right. If you think one wrong word about China and Taiwan and it puts, you know, the President, it puts us in a very difficult situation. If you look at the list of names, they all rely on this AI trade or they're all involved in it. Even when you look at a Blackstone, you look at a Goldman Sachs, I mean they're financing, they're banking and you can go, Boeing relies on, I mean the list goes on and on. And so when you think about Jensen not being there and you think about what they want to do, right. They want their technology to be embedded all over the world. And if China is not buying those chips, it makes it very difficult for certain parts of the world that are relying on China like a digital belt and road for all intents and purposes. So to me I, there is a scenario here where the wrong word about Taiwan could really be a difficult spot for us, for China, for Taiwan and Taiwan semi.
- [24:41]
Melissa Lee
Taiwan semi in particular. I mean it is at the heart of all of the manufacture of all the chips. The hottest IPO chip, IPO that's going to come this week. Cerebras makes its chips at Taiwan semi. I mean that's how intertwined this sort of trade is. We're talking about Nvidia and finally it's broken well above 200, which is sort of like that line in the sand. So what do you see here?
- [25:01]
Katie Stockton
Well, it is a breakout but it's not a confirmed breakout. And in this environment we're always very adherent to our methodology because of how steep these rallies have been. So Nvidia is up against this 212 resistance level. If it posts a couple of weekly closes above, that confirms a breakout. That would be a bullish intermediate term development within the long term uptrend. There are some minor signs of exhaustion from the demarc indicators, but breakouts can overrule those.
- [25:28]
Melissa Lee
There's a lot more fast finding to come. Here's what's coming up next.
- [25:30]
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Next Netflix chilling out as shares continue to slide since its last earnings report. But can the streaming giant turn things around? Or is it time to say goodbye to the binging? Plus, talk about good form, the massive run in one semi testing company, and what the CEO sees in store for the stock after rallying more than 400% over the past year. You're watching Fast Forward Money live from the NASDAQ market site in Times Square. We're back right after this.
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- [26:34]
Melissa Lee
Tennessee 2012 what made you confident that you could do something that hadn't been done before? I have no fear of failure.
- [26:42]
Narrator/Announcer
Trailblazing women, changing the game.
- [26:44]
Katie Stockton
One of my favorite pieces of advice. Think about what you your boss's boss needs.
- [26:49]
Megan Casella
Leadership can look in many, many different forms. It really does come down to just trusting yourself.
- [26:54]
Melissa Lee
Life is short and you just gotta think big to accomplish big things.
- [26:58]
Narrator/Announcer
Julia Boorstin hosts CNBC Changemakers and Power Players new episodes every Tuesday, wherever you get your podcasts.
- [27:07]
Melissa Lee
Welcome back to Fast Money. Netflix falling for the third day in a row, sixth of the last seven. The stock now down nearly 9% this month, on pace for its worst month since January. And since the reported earnings on April 16, Netflix is now around 20%. Tim flagged this on the call earlier today.
- [27:23]
Guy Adami
Well, it's, it's, you know, seemingly, one would have thought, let's get through this WBD thing Let's get an outlook. There was a sense that when we got a 26 outlook, you know, a few months back, it was going to be better. In fact, it was soft and it was certainly not full of catalysts. And when a stock trades north of what basically all time highs on multiple, although not back where it was at 130 a share, it certainly discounted from that. But the question is what's going to get Netflix going? And I think we're going to need to, to see what's the next thing in terms of what are they, what are they pushing in terms of new events. It's not going to be the traditional sports model. We got kind of excited that they were getting involved in these Christmas football games and whatnot. I think we're still all about their pricing power, what's going on internationally and, and the ad supported tier. But right now I've been adding to weakness over the last couple of weeks. It's not been a lot of fun.
- [28:18]
Melissa Lee
What do you feel about the charts?
- [28:19]
Katie Stockton
You know, it's kind of a classic bearish reversal. Longer term, if you look at the monthly chart, you see all the indicators having rolled over and then the relief rally off of that February low was very much characteristic of a counter trend move. And how fast and furious it unfolded came right up against the resistance at the 200 day moving average, which of course has also rolled over and now it's pulled back already below initial support. So there's another 10% downside to the next support.
- [28:47]
Dan Nathan
Reed Hastings headline, I think concerned a lot of people, maybe rightly so, I'm not sure. But you know, I was one that thought once there was clarity on the Warner Brothers Paramount thing, the stock would drop to 125, 130. It did not. It got to 107. I think now all of a sudden people are focused on valuation, which I don't think is ridiculous, but maybe it's expensive in an environment where growth is not there.
- [29:07]
Tim Seymour
Yeah, growth decelerating. I think next year is probably what's kind of weighing on folks. But if you think about some of the options here, you know, I look at, you know, the Warner Brothers and the Paramount, I'd much rather own Netflix than this. I'd much rather own netfl Netflix than most things in the entertainment space. Because to Tim's point, some of the things, some of the initiatives that they were putting in place prior to that bid, these are the things that are going to take a long term sort of view. And that's what Reed Hastings was so good about but I think the CEO who's been there the whole time Sarandos I mean this is kind of the DNA in a way. So in many ways I think they're probably going to use this unsettling period in media to kind of establish what's going to next 10 years are going
- [29:46]
Melissa Lee
to be like how about this versus Disney?
- [29:49]
Guy Adami
Well I, I think what Dan is saying in terms of confidence, it's hard not to be confident in Netflix given the execution that they've had. And again I would just go out and say almost 70% of their engagement is non English speaking in terms of again both the content and the hours engaged. But I think Disney has been clearly for what has been an investment for me. I've been an investor. This is a trader stock and right now I think the, the trade in Disney is a better, better trade.
- [30:17]
Melissa Lee
Coming up, an equipment Quinn Tupling Shares of semi testing company form factor surging more than 400% over the past year. Can the rally keep running? The CEO will join us next. Fresh off ringing the closing bell right here at the Nasdaq. Don't go anywhere. Fast Money is back into
- [30:35]
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- [30:49]
Melissa Lee
Welcome back to Fast Money. Stocks starting the week in the green. The Dow climbing 95 points. The S and P and Nasdaq both with small gains notching fresh record closes, some after hours action. Shares of hims and hers lower after missing estimates on the top and the bottom lines. Form factor ringing the closing bell at the NASDAQ today holding its investor day as well. The $11 billion company makes testing and measurement products that are used to test chips before they're added to circuits. Its customers include Nvidia, intel and SA. The stock has been surging alongside the AI chip trade up more than 400% over the last year. CEO Mike Slesser joins us now on set. Mike, welcome.
- [31:23]
Mike Slesser
Thank you for having me.
- [31:23]
Melissa Lee
You've been CEO since 2014. So you've seen this industry through cycles. And I'm just wondering for those who say it is different this time around that it's less cyclical because of things like subscription memory. I mean is it less cyclical? Is this different do you think?
- [31:38]
Mike Slesser
I think structurally the semiconductor industry is cyclical now. We're in a very strong upcycle right now, no question about it. A whole new vector of demand from the high performance compute silicon powering AI has really driven demand from our customers and their customers to unprecedented Levels to a place where the whole supply chain is catching up. Now, if that demand continues, we'll continue to be in a strong upcycle. Right. And all the indications are that demand's going to continue. So all of us in the supply chain are in investing.
- [32:12]
Melissa Lee
So. But you do believe that it is, it will. Will we see it the same sort of boom and bust cycle that we've seen in the past or has it smoothed?
- [32:19]
Mike Slesser
I don't know whether it's smoothed if you look at the underlying dynamics. But the semiconductor industry certainly is more broad. Right. First we had PCs a couple of decades ago, then we added mobile. Now you see semiconductors being pretty pervasive, powering high performance compute, but in all kinds of consumer applications as well. And that should help the cyclicality of the industry.
- [32:40]
Tim Seymour
So as quickly as you saw this demand and this kind capacity constraint. Right. Couldn't it go the opposite way if there was kind of a pullback in demand? And then you'd have a situation where you'd have such over capacity. Like isn't that like you just said, it's traditionally very cyclical. The booms and busts are the thing that makes this kind of industry a really interesting one and probably challenging for you. But when you think about like your stock, it's going parabolic. These are not normal moves. And so you could assign that to some of the behavior that you're seeing in ordering. You know, there is gravity, right? There is something like that. So we should expect at some point demand to come back in and then over capacity.
- [33:17]
Guy Adami
How.
- [33:17]
Tim Seymour
How does the industry deal with that?
- [33:19]
Mike Slesser
Well, I think the industry has gotten a lot harder to add capacity in this industry. Right. Moore's Law, you're all familiar with, made it really easy for our customers to produce twice as many transistors every two years. Moore's Law is basically dead. Right. And so resorting to the way to add capacity now is not to shrink chips, it's to build big factories. Factories. And it takes years to build these big factories. As you've seen with TSMC in Arizona, Samsung in Korea, these things now take a long time to come online, especially at the scale that the industry is operating at today.
- [33:52]
Dan Nathan
Mike, you have 36% of market share of a growing pie. My question to you is what's the barriers of entry to get into your business?
- [34:00]
Mike Slesser
Yeah, the barriers are pretty high. Right. Most places in the semiconductor supply chain there's a ton of technology. And that technology is applied to some of the key customers you talked about. We work with those customers every Day on optimizing our R and D spend, our technology, applying it to problems that they want us to solve, that becomes a pretty sticky business. Right. And so those customer relationships, as we shared with people at the investor day today, really important to the long term sustainable competitive advantage. There's also a ton of intellectual property and innovation in the products we build. And so there's a competitive moat there as well. Do we have competitors? Sure, but it's pretty concentrated, just like it is in the wafer fab space.
- [34:44]
Guy Adami
Mike, help us. Your customer base run a bit of a kind of a gamut within the semiconductor space, even though some of them are in the exact same business. But as we've seen in the markets, this rotation within the semiconductor space, can you impute from some of what you're seeing with your customers? You talked about more consumer applications and is there something more we can read from this and from what you're seeing on the demand side?
- [35:08]
Mike Slesser
Yeah, it's typically a very hard short term forecast to read. That's one of the reasons why our strategy's been to partner with all the leaders and build a diversified revenue base. It's very difficult to play catch up when an application takes off. So hbm, great example driving our business today. We shipped our first HBM program, first HBM product to our number one customer over a decade ago. Right. And that stickiness, that continued evolution of the relationship, you know, those are the places you have to be when the demand takes off. Because these things are so complicated, it's just impossible to pedal and catch up.
- [35:46]
Melissa Lee
I'm just wondering from your standpoint, you said Moore's law is dead, which is a very interesting statement to hear from somebody in the industry. But how should we think about how chips are becoming more efficient? Maybe not by compute power when it comes to Moore's law, but in terms of efficiency and the build out, the associated assumed build out that is happening around the data center, whether it be power or cooling systems and things like that. I mean, shouldn't we believe that chips will become more energy efficient, for instance, and so therefore that build out may be overstated at this point. I mean, how should we think about the development?
- [36:18]
Mike Slesser
Yeah, there's a couple of different ways we think about it. Anyway, when I said Moore's law is dead, I mean shrinking transistors, getting faster, cheaper transistors, transistors. But this is a very innovative industry. And so us and our customers continue to work on other ways to make more efficient, more capable compute chips. So things like advanced packaging, which you May have heard of kind of taking over the mantle for Moore's Law and is one of the reasons why our business is as strong as it is test becomes absolutely enabling for advanced packaging. I won't get into the details here, but the industry is super innovative and so all these different tricks to continue to increase compute efficiency. CO package optics, another one. Right now the semiconductor industry not just running on electricity or electrons, optics and photons becoming a big part. And I think that's one of the reasons people are enthusiastic about us as well. We got a great position with CO package optics.
- [37:16]
Melissa Lee
Mike, great to see you. Thank you for coming by. Keep us posted.
- [37:19]
Mike Slesser
Thanks for having me.
- [37:21]
Melissa Lee
A form factor F O R M is a ticker on that. How does the chart look?
- [37:24]
Katie Stockton
Great. You can imagine. Parabolic. Very good news. Momentum look.
- [37:29]
Dan Nathan
Great story. That's the question. This parabolic move, it's a five bagger I think since September of last year, which is extraordinary and deservedly so. But I think the average price target according to fact set is about 150. That's where the stock closed today, about 151.
- [37:43]
Melissa Lee
I feel like the part of the commentary that you hung on to is yes, it is still cyclical.
- [37:48]
Tim Seymour
Yeah, I mean we know this is going to happen. It's just a matter of when. Right. And it demands, I guess, how bad it is. And when you think about the end of Moore's Law, I mean Jensen has been talking about that, I think for five years or so. So if you're thinking about double the capacity of transistors and you know, power and you're going to have roughly the same price, well, he's in a capper seed for that to happen. But you know who's not going to be Micron Intel AMD. Right. We moved away from GPUs. That's what the story is right now. It's clusters of CPUs. Well, CPUs traditionally have also been very cyclical because we've seen lots of consumer LED downturns. Well, right now if we see less demand for AI servers, then all of the capacity that's gone online is going going to be not all of it, but a whole heck of a lot of it is going to be idle. And that's why these things are so cyclical. So to me, as much as you might see overshooting to the upside as far as orders, it's going to go the opposite way too when we see a pullback in demand.
- [38:44]
Guy Adami
Totally my own interpretation. But I heard, you know, sixth inning tops, maybe fifth inning from his interpretation of where we are on this cycle and we know it's cyclical.
- [38:53]
Melissa Lee
Coming up, charting abroad what Katie Stockton sees in the international technicals and how it's holding up to the market stateside. More of that when Fast Forward Money returns.
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- [39:38]
Melissa Lee
Welcome back to Fast Money. ETS for the international market continue to make gains this year. The iShares Emerging Markets ETF is now up nearly 25% since January. So Katie's been taking a look at the charts of the group. How do they look?
- [39:49]
Katie Stockton
Well, we have seen good participation broadly in the uptrend around the world. When we look at the ratios, that's where we find more points of interest. If we're comparing the IFA countries which is developed global versus the US and then also emerging countries versus the US I think that's where the fascination is because we have seen a pretty distinct long term turnaround in those ratios that began last year and we think will persist this year. I don't think it will be a dramatic phase of outperformance, but certainly a more balanced phase of relative performance between international and the US and that is a change and it is a positive one for international managers of course. And it does, you know, sort of draw attention to the concentration of the leadership here in the US as potentially a risk. In relative terms, is there an emerging
- [40:37]
Dan Nathan
market specialist in the house to be.
- [40:39]
Melissa Lee
Oh, oh, oh hi. Oh there is one.
- [40:42]
Guy Adami
Oh well it took a long time to get here. Right. The relative underperformance of emerging as an asset class was over a decade. You can make an argument kind of peaked really when the pigs started coming out that was are the southern European countries. But it started to create a concern around emerging markets and some of the trickle through. But more importantly to the present countries that are very exposed to the commodity super cycle. Remember epu, Peru, ech, Chile, these are interesting places. I think EWZ and Brazil is going to continue to outperform. Remember also Taiwan, Semi and Samsung are pulling up emerging markets. The size of these companies are making a greater weighting. There is a math equation here that's helping. And remember Taiwan and South Korea, even though they could be and should be are not developed markets. And it's partly it's accessibility and it's less about governance really. We can't buy Samsung here. So it's part of the reason why it remains emerging. It's part of the reason why emerging is really outperforming. Think about the biggest memory companies in the world. So EM has outperformed developed by 10%, US by 10% over the last two months.
- [41:48]
Melissa Lee
I mean SK, Hynix and Samsung are more than 50% of the cost.
- [41:51]
Dan Nathan
So that's a real quick EWZ. Lower left, upper right have been pullbacks but banks, resources and energy, you get it there. I still like ew.
- [41:59]
Melissa Lee
All right, coming up, a growing circle. The hundreds of millions being raised by the stablecoin issuer and what Katie is seeing in the Bitcoin miner technicals more fast money into. Welcome back to Fast Money. Circle shares surging 16% today after beating EPS estimates for the quarter. The company also announcing it raised over $200 million in the Presale of Ark, the native token of its new blockchain, the CEO Circle Jo Squawk Box this morning to discuss the quarter. Here's what he had to say.
- [42:35]
Guy Adami
We saw about $30 trillion of on chain transactions in Q1. That's up, you know, multiple hundreds of percent year on year and USDC now represents about 80% of all dollar digital currency transactions in Q1.
- [42:52]
Melissa Lee
Other crypto related stocks, Coinbase, Robinhood Strategy all moving higher today. And that's something that you were flagging earlier today.
- [42:58]
Katie Stockton
I think it is meaningful and Circle's chart looks great. It has this kind of basing shape to it. But even more broadly bitcoin has certainly found a footing and that has carried over to sentiment in the space to the bitcoin mining companies as a source of relative performance right now and actually more steady counter trend moves which are the stuff potentially of longer term lows. So we highlighted today in a CNBC Pro article, strategy and strategy had reacted positively to a couple of counter trend signals. Now it's got better upside momentum, better relative performance, about 13, 14% to the next resistance, exceptionally high beta, so high risk in a way. But we believe that the turnaround is the start of something potentially meaningful.
- [43:44]
Tim Seymour
All right, that friend of mine who's a good crypto trader, young guy, he says why don't you tell your buddies to take some of that semiconductor P and L and start buying crypto because they're just okay, he's not speaking. I said young by the way. But I just think that's interesting that the crypto guy guys want the equity market guys to use the profits in Nvidia to start buying crypto.
- [44:04]
Dan Nathan
Bearish or bullish reversals. Katie's right. Average price targets buck 35 I think so Analysts might be behind the curve here. Big valuation, but big EPS growth as well.
- [44:15]
Melissa Lee
Should Coinbase and Robinhood be up though? I mean crypto trading was.
- [44:18]
Guy Adami
It should be, yeah, absolutely. And I think again, this is kind of the trade you move from the center out to the plays that are more derivative plays. But Coinbase I think has underperformed here. I'm long Coinbase and, and I'm long hood.
- [44:32]
Katie Stockton
I would agree it's just all within the ecosystem and certainly there's outperformers and underperformers. But if you think about a strategy, it's really a leveraged play on bitcoin. So you know what you're getting with that. For Coinbase and others, these are turnarounds and I, I do think that their short term breakouts, mostly above our cloud based or resistance levels, are pretty promising to suggest that at least Q2 overall will be a decent quarter for them.
- [44:57]
Melissa Lee
Up next, final trades, Final trade.
- [45:14]
Guy Adami
Tim this EM discussion. K Webb going higher.
- [45:18]
Katie Stockton
Katie I'm going with Ewa which is in Australia. Exposure be the eye sharers.
- [45:23]
Tim Seymour
Dan I'm going with him.
- [45:26]
Dan Nathan
Guy my dear friend Mrs. Andolino is in the hospital. She's not feeling well, but she asked the nursing staff to get CNBC's fast money on. So feel better.
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Dan Nathan
Mrs. That well, seriously. On that note. EW said Mel, I think that goes higher.
- [45:42]
Melissa Lee
All right, thank you for watching Fast Money. See you back here tomorrow. 5 Mad Money Jim Pamer starts right now.
- [45:51]
Narrator/Announcer
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its 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 Traditional home security
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Guy Adami
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Tim Seymour
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