← CNBC's "Fast Money"
CNBC's "Fast Money"
Debating A Fed Rate Cut… And Back-To-School Blues 8/4/25
00:43:42
The traders weigh the odds of a Fed rate cut on the horizon, tech earnings continue as Palantir reports Q2 results, and with back-to-school season looming, how can retailers hold up against Trump’s new tariff rates. Plus, Robotaxi expansion revving up with a Baidu-Lyft collaboration. 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 on WhatsApp, no one can see or hear your personal messages. Whether it's a voice call message or sending a password to WhatsApp, it's all just this. So whether you're sharing the streaming password in the family chat or trading those late night voice messages that could basically become a podcast, your personal messages stay between you, your friends and your family. No one else, not even us. WhatsApp message privately live in the NASDAQ markets in the heart of New York City's Times Square, this is Best money. Here's what's on tap tonight. Back in rally mode, stocks all but erasing the losses from Friday's sell off as hopes for September rate cut continue to grow. How much can we expect the central bank to move this year and what will it mean for markets and rates? We'll debate that. And the back to school blues retailers bracing for a busy shopping season with the impact of tariffs top of mind how they're setting up for September and how to trade the stocks. Plus, two of the year's hottest stocks on the move after earnings. Figma falls in its third day of trading and the headline prompting one of our traders to load up on shares of Lyft. I'm Melissa Lee coming to you live from Studio B at the Nasdaq. On the desk tonight, Tim Seymour, Karen Feinerman, Steve Grasso and Guy Adami. And we start off with that quick turnaround in stocks, the S and P jumping almost one and a half percent today, nearly erasing all the losses from a post jobs report sell off at the end of the week. The Dow gaining 585 points while the Nasdaq jumped nearly 2%. Treasury yields meantime, ticked lower, with the yield on the benchmark 10 year hitting its lowest level in three months. The chances of a Fed rate cut in September rose even further. So is the central bank destined to make a move sooner rather than later? And will that be the green light for an even bigger market rally through the end of the year? This almost goes back to our game when you get the diet.
- [02:18]
Tim Seymour
Yeah, I like this game.
- [02:19]
Melissa Lee
If I told you bad news, good news or Bad news, the game.
- [02:24]
Karen Feinerman
I mean we have a lot of.
- [02:25]
Melissa Lee
Games, so many early in the week, a lot of tomfoolery here. But in terms of the bad jobs report on Friday, bad news is bad news, bad news. And today maybe bad news is good news.
- [02:35]
Tim Seymour
The bad news on Friday, I think, and if you had played the other game, if you had told me Friday was another good one, that's another good game. The bad news on Friday to me came in the form of a Fed governor stepping down and the BLS firing, which I thought was market moving. And I think it spoke volumes as to what's going on. But clearly I think what the market came to the realization was it's more about what the Fed might potentially do with a softening job market. Now softening job markets suggests the economy again is probably getting get a lot weaker before things start to pick up again. And I don't think a 6300 or so s and P has any of that priced in.
- [03:11]
Karen Feinerman
By the way, we talked about the Bad News Bears a couple of times last week. I think we named more people on the Bad News Bears than have ever been named on financial TV and ever again. So let's get back to the market. I do think you had a case here where the bad news being good news is where we were this morning. We also had a chance to assess the an earnings season that's been extraordinary. I mean you've beaten 9% or so in terms of where earnings are and you've beaten around 7 and a half percent on the top line, about 4% on the bottom line. There are dynamics in every sector that I think imply margins are doing okay, even in a world where higher tariffs, especially margins that are getting help from AI and related technology innovation, etc. So I just think we got very negative on Friday and that's appropriate given what we heard from that job number. I would say again, however, if we get another bad print, I don't care what the Fed is going to do. We don't want and I don't think the job market is going to essentially fall apart before our very eyes. But that's what it felt like on Friday. Suddenly it was a job market that the three month average at 35,000 jobs was the worst three month average we had seen since before COVID and we didn't know that. So I would get back to we still have an August payroll number that will be before that next Fed meeting and I think that's very important and I don't expect that those numbers are Going to be that good. But I'll leave that. That. Excuse me, that poor. But I'll leave that to the economist.
- [04:31]
Melissa Lee
But the Fed put is larger and firmer than ever before with the opening on the board. Right.
- [04:37]
Steve Grasso
With Trump's ability to.
- [04:38]
Melissa Lee
To put somebody of his, you know, thought process in terms of rates.
- [04:42]
Steve Grasso
Right. Well that's one more vote. Right? Yeah. Although back to your question. I think inflation is bad news. I think labor could be good news either way if it's weak because then you'll see the Fed come in and if it's not weak, well then okay, everything's fine. I think both of those could be good news. Inflation I think really ties there.
- [05:03]
Karen Feinerman
You think inflation is worse than weak jobs?
- [05:06]
Steve Grasso
I think the Fed does moves the Fed. Inflation keeps the Fed pattern and that's what he said.
- [05:12]
Karen Feinerman
What would you rather see for the.
- [05:13]
Steve Grasso
Would I rather.
- [05:14]
Karen Feinerman
Ooh, we're going to derivative and people taking over the show and there's all kinds of stuff.
- [05:19]
Melissa Lee
I'm taking over the show, by the way. Would you rather.
- [05:23]
Steve Grasso
Would I rather. I guess I'm a little. I guess I'd rather see weak jobs because I think there's an explanation. Right. You and I talked about this a little bit before the show of I would think we might see a big jolts number which would say there's not enough people to fill the payrolls and that's why the payrolls were light.
- [05:42]
Guy Adami
So Powell said that we are further away from the inflation mandate last week. So jobs have to get considerably worse for him to do anything there. Last week we had an outside reversal day and then close to one on Thursday. I think it's not over yet. We have August through October is the weakest seasonal adjusted months for the S and P. I don't think we're going to see an end to the sell off probably in the next couple of weeks. I think you can have another revisit of a sell off again. I wouldn't be buying. I'm always buying a dip.
- [06:20]
Melissa Lee
Right.
- [06:21]
Guy Adami
I wouldn't be thinking about this is over and where the coast is clear at this point, I think that you're going to see some weakness. We had stellar reports out of Mega Cap Tech last week and it was not enough to guard us from the sell off we saw last week.
- [06:36]
Tim Seymour
Yeah, some of those reversals. Steve's right. We talked about it last week. I think Tuesday was the day. Thursday as well. You don't see that all that often. You saw it twice last week in individual names in the broader market. Obviously Day like today, you forget what happened last week. But nothing's really changed on the fund on the technical basis in terms of some of the things that might have broken down and say I don't listen, I have no idea what today's rally was predicated on. You know, I don't know if Friday was month end. I know it was 1st of August, but everybody has a different calendar. With all that said, the technical damage done last week is still in place.
- [07:08]
Guy Adami
One more thing on Treasuries. So if you look at Treasuries, you have the 2 year below 4%, you have the 10 year below 4 and a half percent, you have the 30 year below 5%, considerably below all of those levels with the exception of the two year. That to me is not a panicky market. That to me is not worried about Powell being ousted. That to me is not panic yet in the market.
- [07:31]
Karen Feinerman
Well, what's interesting, and you brought up the Fed put and clearly the Fed put is back in some capacity, if you remember and I think everyone remembers back into May, in the depths of, excuse me, of April, where, where the sense was the Fed put was moving low.
- [07:45]
Melissa Lee
Yeah.
- [07:46]
Karen Feinerman
And we didn't know where the Trump put was, but we felt that the Trump put was also somewhere. And of course it was really the, it was the 10 year yield put that ultimately took over. But I think the administration's puts, the Federal Reserve's puts, they're very much alive for this market. It explains the extraordinary reach for risk, the liquidity that is run amok. So in other words, it should be a tightening environment of some kind, even if it's less tightening. And yet there's, we haven't been this awash in liquidity, so, so much so that the IPO markets and the M and A markets are about to run crazy as well.
- [08:17]
Melissa Lee
All right, well for more on the Fed's next move, let's bring in Steve Liesman. Steve?
- [08:24]
Steve Liesman
Hey, Melissa. Just moments ago, San Francisco Fed President Mary Daly, I believe an interview with Reuters saying that making some dovish comments, saying the Fed can't wait forever to cut and it's more likely the Fed needs to do more than two cuts this year rather than less. More on that in a second. But daily joins Wall street economists thinking the jobs numbers, they weren't political, they were real and could signal a possible slowdown. Goldman Sachs writing over the weekend, quote, Friday's payroll report brings payroll growth closer in line with big data indicators of job gains and the broader growth data set, both of which have slowed significantly in recent months. Taken together, the economic data confirm our view. The US economy is growing at a below potential pace and the futures market is trading like that. The Fed funds futures are are acting like these numbers are real. Adding a third expected rate cut from the Fed this year. It's not much more than 50%, a 55% but that is new that the Fed would cut at every meeting towards the through the end of the year. On Friday, Atlanta Fed president Rafael Bostic telling CNBC if it looks like the labor market is weakening in a sustained way such that the risks on the side have increased to be greater than the risks on the inflation side that I'd be open to increasing the number of cuts this year. Today I don't see that. Well before the jobs number the Fed was missing only obviously on inflation, weak job growth could mean it's missing on both sides of the mandate with most thinking the Fed it'll address jobs and worry about inflation later.
- [09:48]
Melissa Lee
Melissa Karen brings up an excellent point as she always does in terms of the impact of immigrants coming out of the labor force and the impact on numbers. Is that sort of anywhere in this discourse?
- [10:03]
Steve Liesman
It absolutely is. In fact, Powell mentioned it at the press conference. So your equation of unemployment, right, is the total labor force minus those who are who are unemployed. But both sides the labor force are changing now, right? We have fewer people coming in. That means fewer people, fewer part of the workforce, people coming in, fewer people working. So all of that is a problem and it's all changing. And you could have 4.2% unemployment and it could mean that many fewer people are working because you've reduced the size of the labor force. So it's a fascinating question and it's probably a part of the reason for the big revisions. There's a lot of sort of unique stuff that's been going on. I've been talking to some labor economists that make it difficult for the seasonals and all kinds of other stuff that's out there to to adjust over time. And one of the other things that could be is it could be an inflection point if you have a situation where the things we use to adjust the data are looking for an expanding economy, an expanding workforce, and the economy is slowing and the workforce is not expanding then. Melissa, I know it's a bigger answer than you wanted, but all of that does play an important factor in the statistics.
- [11:13]
Tim Seymour
Steve, the downward revisions obviously created a bit of a problem. I'm not certain we'd be having the same conversation if it was in reverse. But Forget about that for a second. Is there a methodology problem in terms of the numbers? I mentioned that. Because obviously a lot of decisions are made based on these numbers into them and then actually out of them as well?
- [11:37]
Steve Liesman
Well, look, on one level, you get what you pay for, right? If you want to count every job precisely every month, you can do it. It will cost you an awful lot of money. You know that the 90% confidence level on the jobs report is plus or minus 136,000. If you want a precise number to trade on. I'm afraid we're not able to do that for you over time, over a couple, three months, we can give you a pretty good idea of what's happening in the job market. Can it be done better? Can they use big data? It's being discussed. They're trying to figure out. There's a lot of problems with that. Trying to get data from a private company, for example. Is that data then only available to the public at a given time? What happens when that public company, if it goes out of business? There's all sorts of issues. A lot of smart people have been thinking about this for a long time. You are trying to measure a base of 133 million jobs and what's happened to that every month. It's not an easy job. And the kind of precision that traders seem to want or that the president seems to want seems unattainable.
- [12:41]
Melissa Lee
Steve, always good to see you. Thank you.
- [12:44]
Steve Liesman
Pleasure.
- [12:45]
Melissa Lee
Steve Liesman, UBS Asset Management, out with a note to clients today emphasizing the need for a diversified portfolio due to increasing economic growth risks. Evan Brown is behind the note. He is the firm's head of multi asset Strategy. Evan, welcome back. Good to see you. So was Friday the beginning of a growth scare in your view?
- [13:03]
Evan Brown
I mean, it was jarring to see, you know, 150,000, three month moving average dropped to 35,000. And we've been of the view, I think everyone's been of the view that there's going to be a soft patch and we're in it. But if you're slowing that quickly, that raises the potential that something breaks, there's some kind of shock and then you get a bunch of layoffs. We are not seeing that in the data right now, but we're getting dangerously close. And so we talk about buying dips. Look, we're still constructive on the stock market. We think things will, will hang in, but we'd rather be buying dips and bonds right now as insurance for that potential scenario.
- [13:42]
Melissa Lee
So what are you looking for? Are you waiting for the next jobs report as your data point? I mean, what sort of signals to you that we are beyond the point?
- [13:50]
Evan Brown
Well, I think the, the encouraging thing is that jobless claims, not only have they been stable, they've actually been coming in lower. So that gives us some, some peace of mind. It makes sense, in fact, that that over the last few months after Liberation Day, May, June, you know, there was a slowdown in hiring and maybe some layoffs. But since then, as things have settled down, those layoffs have come down. You've seen that in initial jobless claims. So that I think is the best real time data that we get in high frequency tracking the labor market. And so we'll be focused on those.
- [14:24]
Guy Adami
So, Evan, if you're looking at buying bonds, what's the traditional split used to be? 60, 40. It sounds like you're more aggressive on bonds. What would you think this split should be now with the environment we're in?
- [14:35]
Evan Brown
Look, I think so I would still be overweight equities versus bonds.
- [14:39]
Melissa Lee
Right.
- [14:39]
Evan Brown
But you know, the portfolios that we run, we actually, we have leverage.
- [14:44]
Melissa Lee
Right.
- [14:44]
Evan Brown
So we can be overweight equities and bonds at the same time by borrowing in cash. And so that's, that's kind of how we, how we see it with that for, for the retail investor, it's that extra cash that you have on the sideline. The next move just to diversify a little bit would be into bonds.
- [15:00]
Steve Grasso
So thanks. Being here, when you think about bonds and you think about corporate credits versus Treasuries, is there enough, is there enough credit premium that you're getting?
- [15:11]
Evan Brown
Not really. There's really, I mean, with, with NIG, about 80 basis points of a spread, we're at the lows. You know, I don't think that widens out too much because I don't think we get a. If we do have a recession, I don't think we have a big recession, but there will be some widening there. And I just don't think you're compensated enough. So I would stick with Treasuries. Yeah.
- [15:34]
Karen Feinerman
Evan, help us understand then the process and the sequencing almost of asset allocation. We have another terrible number in the first week of September on the jobs front. What does that do inside of your investment committee? How do you make those adjustments? And let's just hypothesize another terribly weak jobs number in the first week of September. How does that affect your asset allocation here?
- [15:58]
Evan Brown
Yeah, so the idea is that we're well diversified ahead of these events so that we don't have to chase. And I wish I could have told you that I knew that those revisions are coming and that we bought a bunch of bonds right before Friday. We, we didn't. But in fact, we were looking for a little bit of a rise in yields to buy into.
- [16:14]
Karen Feinerman
But it would, but it would imply that the world's different than what you thought before you went into that period.
- [16:20]
Evan Brown
Definitely. Definitely. I think we will get, we'll get mixed data over the coming weeks ahead of that next jobs number and I think we'll get a pickup in bond volatility. So bond volume is extremely low right now. I think it should pick up a little bit with all the moving parts in the economy. We haven't even talked about inflation yet here and so say inflation comes in a little bit hot and you get yields moving higher. We would be using that to add some before the next labor print.
- [16:47]
Tim Seymour
I think Ray Dalio actually said in a tweet that he would have fired the BLS secretary as well because. Not because he or she was doing something wrong, because the methodology is. We just talked to Steve about it. I only bring that up because institutional credibility in your notes is concerning you, which all roads lead back to gold, which has done extraordinarily well. Those roads still continue to lead to gold.
- [17:10]
Evan Brown
Yeah, I think so. I mean, we've had a consolidation in gold, but with, with what we were seeing with the BLS chief getting fired. And again, I think Steve Liesman's right on in the sense that the methodology of capturing this data is difficult and there can be a review on how to collect these data. But when it's viewed through purely a partisan lens and then you raise the prospect of going completely the other direction where you have a partisan hire who's then going to look to impact the data. Otherwise, you know, we can't take for granted the institutional credibility that we have in this country and our economic data. And it'll be very important to see who is nominated this week and then also just over the coming weeks when the Senate comes back if they, if they approve that person.
- [18:03]
Melissa Lee
Evan, good to see you. Thanks so much for coming by.
- [18:05]
Evan Brown
Great to see you. Thanks for having me.
- [18:07]
Melissa Lee
All right. Meantime, the US construction ETF ITB popping nearly 2% today as it continues to benefit from lower rates. Homebuilding, homebuilders, Toll Brothers, Lennar Pulte Group and Dr. Horton all rising about 2% or more. Housing adjacent names like Wayfair, RH and Williams Sonoma seeing even bigger gains. So what do we do here? Because presumably Rates are coming back, coming down in a faster, in a bigger way guy.
- [18:31]
Tim Seymour
But if rates are going down because the unemployment rates can start to take higher in a meaningful way, I mean I think the unemployment rates could potentially, potentially the biggest headwind for the housing trade. That to me is the one thing outside of rates that people should be worried about. So I get the knee jerk reaction. But if rates are going down because the unemployment picture is getting murkier, then you should not be in these names.
- [18:50]
Steve Grasso
I do think though there's still so much pent up demand. Right. We've had such a supply demand dynamic that's been so out of whack for so long. So for names like a Home Depot, I think there's still. I get what you're saying, but I think there's still a lot of demand. Look at like a name like Zillow, if it could add more volume to that platform with low cost, that's great.
- [19:10]
Guy Adami
50% of people have a mortgage rate below 6%. You have to really move that rate to get people out of their homes. They own. They own a mortgage, they don't own a home. Everyone says that. That's the truth. So you need that rate to come substantially lower.
- [19:22]
Melissa Lee
Your Home Depot.
- [19:23]
Karen Feinerman
Yeah, I like, I like it and I like it in an environment where the consumer has less ability to do much in terms of moving around because of. Obviously I like the moves they've made structurally to their business. They're getting into the distribution channels. We know that their pro business is very margin accretive. I don't know why you'd get too far from a long term holding in Home Depot.
- [19:43]
Tim Seymour
When you go into Home Depot what do you consider yourself? A pro or just a consumer Regular homeowner or somewhere in between does when he's not. I know that but you know, where's your head at?
- [19:55]
Guy Adami
If you have to ask what aisle you're not a pro, right?
- [19:58]
Melissa Lee
No.
- [19:58]
Karen Feinerman
And look, I don't think it's going to be a surprise anyway that I consider myself a pro. Especially when I walk into Home Depot. Look, I mean dad walked around, you know, was doing stuff on weekends. I mean thanks a lot dad, it worked.
- [20:10]
Melissa Lee
No, I'm just. America wants to know coming up I didn't earning the shares of Palantir himself and more all in the move after hours the details and numbers in the quarters next plus beg my taking a breather shares pulling back after the blockbuster ipo. But can the software surge stage a comeback? We'll debate that when fast money returns.
- [20:31]
Guy Adami
This is Fast Money with Melissa Lee right here on cnbc.
- [20:43]
Melissa Lee
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- [20:56]
Guy Adami
Edu CNBC make it online course how to build a Standout Personal brand. Three industry experts will show you how to create and grow your brand step by step.
- [21:07]
Melissa Lee
There's no time like now to start.
- [21:09]
Guy Adami
Building your personal brand now at CNBC. Make it.com/Personal Brand.
- [21:18]
Melissa Lee
Welcome back to Fast Money. Palantir shares popping on the back of its second quarter results. The company posting quarterly revenue over $1 billion for the first time. The conference call kicking off at the top of the hour. Seem to see Morgan Brennan's been listening in. She's got more color here. Morgan. Yeah, Melissa, that's right. The call is still underway and this is a high flyer that's gaining altitude here. So victory lap really for CEO Alex Karp and Palantir based on what we're hearing from the call, this after A beat and RA led that was led by 93% growth in US commercial, US government. Government revenue also up 53%. Top line growth expected to accelerate in Q3. All of this being highlighted on the call, but Karp saying that this is an America story. That's what he told me earlier today, that the plan is to grow revenue 10x over the next five years and do so while reducing the size of the Palantir workforce. Karp also saying, quote, we're growing faster than we are even able to grow. Like we're going to have to start turning away people. We are now very focused on people who are partners that are willing to learn from us and then ramping them up very quickly. Now he calls this a revolution of agency, meaning more radical output at lower cost. And that's a lot of what's being highlighted on this call. Melissa, case in point, talking about Fannie Mae as a customer cracking down on mortgage fraud. A process that used to take two months is now taking seconds. And they're really talking about the power of this ip, this artificial intelligence platform, not only for retaining customers but for growing current customers and how much they're spending and then bringing more customers, customers on board. So shares of Palantir popping up, last I checked, about 4%. And that's after hitting a record high earlier in the trading session. All right, Morgan, Thanks, Morgan. Brennan lost a little bit, but still higher by 3%. Tim here just lamenting how you sold too early.
- [22:56]
Karen Feinerman
Yeah, most of it. I think it's a case where on a price to sales now you've got a 4 plus billion run rate and it is less expensive than it was. And I don't think we've ever questioned whether governments need AI. And in fact that's part of what the headlines show us in the aftermarket in terms of the addressable market. It's just, it's about the valuation. The concentration also of the revenue from the government is something that at times has had people worried. It is a case where being close to the government here seems to be a good thing in terms of the market. This is no question. This is a stock that demographically a lot of young people own, want to own, and I think will continue to own and care less about the valuation. And I think they are in a great spot. I just think it's expensive.
- [23:41]
Melissa Lee
It's a meme that basically what you're saying.
- [23:44]
Karen Feinerman
Yeah, I mean, I didn't say. You said that. I didn't say that.
- [23:47]
Tim Seymour
The story he was telling seven or eight years ago is, was the story and continues to be in there growing. But billion dollar revenue, first time ever, up 48% year over year. I get it. That's staggering. I mean, just in terms of the government up 68% year over year, everything looks fantastic. The problem is this growth rate needs to continue basically at this rate in order to justify a $380 billion valuation sitting on top of maybe five and a half, $6 billion of revenue. So if you believe they can continue this, then the stock's okay here. If you believe it's going to slow at some point, then the stock is still expensive.
- [24:24]
Guy Adami
Yeah, I don't know if they can keep up this pace. 35% of their revenues is the US government. Another 20% are other governments. So it's 55% are governments. They needed commercial to come on as fast as commercial came on now, and to Tim's point, AI is helping them sell. I think they're going to run into a wall one of these days. But it seems like their Runway still has a little bit further to go before that wall comes in.
- [24:46]
Steve Grasso
I mean, the margins are just staggering. Right.
- [24:49]
Melissa Lee
They got to be.
- [24:49]
Steve Grasso
And I think Alex Karp was talking about increasing the margins. That revenue side growing much, not only faster than expenses, that maybe there would be fewer, less expenses. So obviously that is hugely beneficial to the margins. Extraordinary business. It's not for me. I just can't get comfortable. It's not just that they don't obviously they have to keep growing. The acceleration has to continue, right, which gets very difficult. But I wouldn't, I wouldn't short it away.
- [25:17]
Karen Feinerman
This result and this announcement around government AI makes me want to buy chips. I mean, this is part of that sovereign AI story that really is what resuscitated Nvidia as a stock. So I think this is a great announcement for the entire semiconductor space, but specifically for mass compute.
- [25:33]
Melissa Lee
All right, there is a lot more fast money to come. Here's what's coming up next.
- [25:39]
Karen Feinerman
Not a figment of your imagination.
- [25:41]
Guy Adami
Shares of the hot new tech stock pulling back after their red hot post IPO run. Why investors are offloading the stock today.
- [25:50]
Karen Feinerman
Plus textbooks and tariffs.
- [25:52]
Guy Adami
The retailers that could take a hit as consumers start their back to school shopping and just how much of a supply surcharge shoppers should expect. You're watching Fast Money live from the NASDAQ market site in Times Square.
- [26:05]
Karen Feinerman
We're back right after this.
- [26:13]
Melissa Lee
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella.edu.
- [26:44]
Guy Adami
CNBC Make It Online Course how to Build a Standout Personal Brand Three industry experts will show you how to create and grow your brand step by step.
- [26:52]
Melissa Lee
There's no time like now to start building your personal brand.
- [26:55]
Guy Adami
Register now@cnbcmakeit.com.
- [27:01]
Melissa Lee
Welcome back to Past Money. Figma's post IPO rally losing some steam today with the design software company stock dropping 27%, shedding nearly $17 billion in market value just today. But the stock did close just above where it opened on Thursday and is up a whopping 170% from its $33 IPO price. Now, Grasso, I know you said that you had been interested in getting in.
- [27:22]
Tim Seymour
I didn't get in.
- [27:23]
Guy Adami
I didn't get in yet. I do believe, I do believe as they retrace, all of these IPOs usually retrace to the first day's print of wherever it did open up. So I was waiting for that. We got there. But for me, I just want to see how the market digests because this is indicative of the froth or the, or the really out on that curve of people willing to find something that's not a mag7 name and try to look for that growth curve. Figma seems like they have it and there's no customer concentration that I can see. I'm just going to wait and let it sit for a little bit until I start to dabble.
- [27:59]
Steve Grasso
So if it gets to that opening price and trades through that, then you have a lot of supply. No touch.
- [28:04]
Guy Adami
No touch, because then it opens up to the IPO price of $33. Then people start gauging it on that wide berth of $50 that you have from, from 85 back down to 33.
- [28:15]
Melissa Lee
But if this is a risk on sort of barometer, then why was it not up on a day when risk on was on?
- [28:21]
Tim Seymour
Why they priced it at $33, which I'm sure you talked about. I mean, people say it was a successful IPO. I look at it, price at 33 opens at 85, proceeds to trade up to wherever it was. Now you're down. Today, the business is great. I think they are north of 90% margins, like a 45% growth rate. There's nothing not to like in numbers. It's just the way it was priced. You're going to have crazy volatility for the next couple of months probably.
- [28:46]
Karen Feinerman
And I don't think today's pullback, I don't think you're that confused by it either. I mean, it is, it is ironic, right? But I think it does tell you of the environment we're in. And part of the reason they're getting this valuation, in addition to where they, where they play is their, their customer base is Netflix, Oracle, Microsoft, Google, Uber. So I mean, it's, it's an impressive group of some of the biggest companies in the world. And that's, that's reason enough to feel good.
- [29:12]
Melissa Lee
All right, coming up, back to school. Shopping could be particularly painful this year. The toll tariffs are taking on retailers and what it might mean for your wallet. The details and fast money returns.
- [29:28]
Guy Adami
Missed a moment of fast. Catch us anytime on the go. Follow the Fast Money podcast. We're back right after.
- [29:43]
Melissa Lee
Welcome back to Fast money. Stocks rebounding to kick off the week. The dow jumping nearly 600 points, erasing Friday's losses. The S and p up a percent and a half in the NASDAQ leading the gains climbing nearly 2%. American eagle surging nearly 24%. President Trump reacting to the controversial ad featuring actress Sydney Sweeney, calling it, quote, the hottest ad out there. Spotify jumping 5% after the company Announced it will raise premium subscription prices for users in several regions outside the U.S. wayfair surging nearly 13% after topping EPS and revenue estimates this morning. And on Semi also beating top and bottom line expectations but giving disappointing third quarter guidance. Shares falling 16%. We do have some after hours action. Lattice Semi lower even as earnings and guidance come in in line with estimates and Vertex Pharma dropping despite eps. Despite topping EPS and revenue estimates. The company saying they will not move forward studying their next generation pain drug after it failed in phase two trials. That was a major reason why the stock was higher. This non opioid painkiller. What do you want to trade here guys?
- [30:45]
Tim Seymour
AEO not that I know anything about it necessarily.
- [30:49]
Melissa Lee
Do you wear the jeans?
- [30:50]
Guy Adami
He's got them on now.
- [30:51]
Melissa Lee
Do you have great jeans?
- [30:52]
Tim Seymour
No. Excuse me?
- [30:53]
Melissa Lee
Do you have great jeans?
- [30:54]
Tim Seymour
I'd like to think that I do. I mean both with a G and a J. With that said, you go far. Crackstaff and EC can pull up a chart. Talk about a major double bottom in this stock. Stock, no pun intended. That is what happened recently when we traded down in April and in the earnings on the 26th. Tremendous tailwinds now. I think you can stay long the stock.
- [31:13]
Melissa Lee
What a great ad campaign. Everybody is talking about it, right? I mean yes, that's what ads are for, right?
- [31:19]
Steve Grasso
Although this was a little me I guess it was sort of coincident with the ad campaign. There is a little 11 and change percent short interest. So I don't know, there's other retailers.
- [31:29]
Melissa Lee
Who'D rather have Meantime, speaking of American retailers are dealing with some August angst as tariffs wreak havoc on the back to school shopping season. Courtney Reagan's got more on how they are preparing this year. What a tricky year.
- [31:42]
Courtney Reagan
Court hi Melissa. It is really tricky. We're trying to figure it out the best we can. And we know that August usually brings back to school angst for many kids. And this year it's angst for retailers too because they're navigating through these tariff policy changes. And while the majority have imported back to school supplies and even most seasonal clothing came across the US border months ago, new so called reciprocal tariff rates ranging from 10 to 30% on top of any previously existing duties will hit on August 7th. Now for any new inventory or reorders of course, because if it's already here, then you're safe from that, at least for now. So for retail, India at 25%, Vietnam, Bangladesh and Sri Lanka at 20% Cambodia, Vietnam and Pakistan at 19%. Those are troublesome because of the manufacturing in those countries that particularly for footwear and apparel. China's reciprocal plus fentanyl tariffs, those are at 30% as negotiations we believe are ongoing for now. But those could also reset on August 12th. And while Mexican imports are tariffed at 25%, very importantly USMCA goods are exempt. So that does allow Best Buy and Contour brands to breathe easier. They have a decent amount of manufacturing there, at least their vendors do. They're breathing easier for now at least. But in anticipation of tariffs and that are going to be hitting this week, Deckers, Nike, Levi, Walmart, they've all said they're going to have to raise some prices to help offset the cost. Home Depot head said it doesn't intend to raise prices but kind of left some wiggle room. Tapestry says its non price increase mitigation tactics can absorb much of the hit. But just because the so called tariff deadline is here doesn't mean there's really any more clarity for retail or consumers, which is sort of how we started this whole thing because we don't exactly know where the price increases will happen, when they will happen and how consumers will react to them when they do.
- [33:30]
Melissa Lee
Melissa, are most back to school goods, are they already here?
- [33:34]
Courtney Reagan
Most of them are. Most of the back to school goods are here now. You know we also had some retailers talking about a little bit of conservatism when it was coming to planning and ordering because they didn't know if these tariff deadlines would switch it up. Right. Like what if they came earlier, what if it came later and then the costs were going to end up being a mixed average. So I think there's going to be a lot of question marks as we move into these next couple of weeks about the supply availability. Will there be shortages? Did they not buy enough and if they didn't, are they willing to buy more now at the higher cost? So we've got a lot of question marks I think on the availability of merchandise as well.
- [34:11]
Melissa Lee
Court, thank you. Good to see you. Courtney Reagan. And of course remember back when the there was a strike, the port strike and Target had brought in a lot of inventory. Right. And then warehoused it and the cost of warehouse, I mean there are also a lot of incremental costs to consider when you bring in goods to front run.
- [34:28]
Steve Grasso
Are you going back to the time.
- [34:30]
Melissa Lee
Of the apocalyptic of Walmart's apocalyptic inventory issue? Right.
- [34:35]
Steve Grasso
And targets ended up being whatever's worse than apocalyptic. You think we might be facing that?
- [34:40]
Melissa Lee
No, no, no. But I'm just Saying just remember that it might sound smart to bring in the inventory ahead of the tariffs, but there's also all sorts of other risks involved in terms of how much do you bring in, do you bring in too much and the cost of storing all that stuff.
- [34:54]
Steve Grasso
Yes. And the accounting gets tricky. What, you know, you brought them in but now they're a different price. How do you account for them? It feels like you can sort of make up some numbers if you want. Kind of for cost.
- [35:05]
Melissa Lee
Right.
- [35:06]
Steve Grasso
Fifo, is it lifo?
- [35:08]
Karen Feinerman
Well, when I think of back school, I think of Walmart and I think of no one's better positioned to dominate this back to school than Walmart because the pricing gap between Walmart and their peers and their ability to really lean in there and take market share, which they're more concerned about than anything here, especially because ultimately I think they are in control of pricing. But I do think they know there are places where they have, there are elasticities. In other words, there's high frequency items where people are going to go to Wal Mart because they're going to be able to be that much cheaper than everybody else. And I do think you're going to have an inventory bump there because I do think they, their last quarter they showed a drawdown of inventory and I think they definitely brought stuff in for the second quarter. I don't think it's going to be anything close to what we saw.
- [35:46]
Tim Seymour
Remember a few weeks ago we had that Wal Mart's down like nine days in a row, the losing streak and but what we said was that may be true, but if you look at where it didn't really trade all that much lower off a nine day losing streak and now within a few dollars of an all time high. So I'm with Tim on this one. I think Target reports on the 20th this month. I don't think it's going to be good. Walmart the next day, I think it'll be very good.
- [36:08]
Guy Adami
You just gave me a trade idea. So all this, all this extra stuff that's coming in.
- [36:12]
Melissa Lee
Right.
- [36:13]
Guy Adami
So where's it going to wind up? It's going to wind up at Raw Stars, Burlington or tjx. My choice would be tjx. Best chart in those three that I just mentioned.
- [36:23]
Melissa Lee
Yeah, you're a max. And Issa, how can you not be?
- [36:26]
Karen Feinerman
I mean, you know, you got to see what's there, check it out.
- [36:29]
Melissa Lee
But I mean to Steve's point there will be that sort of weird potential trying to figure out what the area is.
- [36:35]
Tim Seymour
Yeah, you have trouble Finding your size when you go.
- [36:38]
Karen Feinerman
It's interesting. Well, I guess what I find interesting, guys, do you have trouble finding things in this past decade to wear? Anyway, nice tie.
- [36:46]
Melissa Lee
Coming more after hours action. Shares of him hers on the move after the quarter. What is next for the stock after more than doubling this year, that is next plus rideshare means Robo Taxi. The deal that that got one of our traders buying shares of Lyft. What it means for the competition versus Uber. Fast Money's back into. Welcome back to Fast Money. Health care company Hims and hers plunging after reporting Q2 results. The stock had been up nearly 5% in the regular session, now down 11 and a half. Our Brandon Gomez has got the numbers here. Brandon.
- [37:27]
Tim Seymour
Hey, Melissa.
- [37:28]
Karen Feinerman
Yeah.
- [37:28]
Tim Seymour
Earnings mixed EPS a beat by $0.02. Revenue a bit light. 545 million shy of the 551 million expected reaffirming though Q3 and fiscal year guidance now Q3 adjusted. EBITDA was the trouble spot here. Came in very light at 60 to 70 million. That's below the 77 million that was expected. The company's CFO telling me it's primarily due to reinvestment in growth. Now I asked where specifically since the company has several irons on the fire, be it global expansion, blood testing or its feud with Novo Nordisk. He said primarily two areas in Q3. First, talent acquisition, signing bonuses for recent C suite hires, specifically in tech, all part of advancing AI capabilities. And then second is higher marketing in Q3 to overcome some of the seasonality headwinds with the bulk of new subs in Q1 for weight loss and core products. Still, Melissa shares lower about 12%, a short interest remaining at 33%. Worth noting for investors as well as always.
- [38:23]
Melissa Lee
Yeah, for sure. And I'm wondering, Brandon, if you're getting any color from the call yet about GLP1s and how quickly they're anticipating that business to shrink, if at all. I mean, Novo Nordisk has really doubled down saying, you know, we're going to go after them very hard. It seems kind of difficult because they're marketing specialized or customized compounded versions, which is still legal in this framework. But you know, it's a challenge.
- [38:48]
Tim Seymour
Yeah, it's all in the fine print. It's really going to come down to sort of how the FDA decides to handle the compounders to your point, as long as they're not offering commercially available dosages, they're allowed to make these compounded versions of the drugs. And then you have hims and hers doubling down, saying in Canada, they're actually going to tap into Novo Nordisk's market share because Novo, you know, in 2018 didn't renew its exclusivity, its patent license for, you know, a $400 fee. And so now Novo, rather, hims and hers, will have access to that market over with our neighbors to the north. So we're really going to see this play out in real time and see how that expands in other markets as well as Hims and hers expands.
- [39:25]
Melissa Lee
All right, Brandon, thanks. Good to see you. Brandon Gomez. And it's just fascinating to think that, you know, when we talk about this, we're talking about this in the context of Novo's loss and not Lilly's loss. Lilly, of course, reporting earnings later this week. But it's all just whatever they gain, Novo is losing.
- [39:41]
Steve Grasso
Well, just one thing, they do say they sell Lilly, but that's just because they go out and get third party Lilly to sell. They don't have a particular arrangement with Lilly. I don't know. Well, you know more about the compounding than anybody. I mean, but there's tremendous demand for it still.
- [39:59]
Melissa Lee
Yes, the price still, people don't want to pay the full price.
- [40:02]
Karen Feinerman
I just think the bar is so incredibly high here. I mean, they went from nowhere to, you know, 75% growth. And the comp coming in here, therefore, was something that they needed to beat. And I think that's the big issue. Obviously, structurally, the story depends on what the FDA is going to allow them to do going forward.
- [40:17]
Tim Seymour
Look at where it traded up to. Look at the February high. Look where we just traded up to. Quarter was okay. I think the third quarter EBITDA guide scared some people. Why the top? Why did you ebit, ebit. Ebit Da.
- [40:31]
Karen Feinerman
Ebit.
- [40:34]
Tim Seymour
Ebitda.
- [40:36]
Melissa Lee
Yeah.
- [40:36]
Tim Seymour
So anyway, that's what scared.
- [40:38]
Karen Feinerman
Thanks for doing that.
- [40:38]
Tim Seymour
But major double top, though there. Texas, technically, for you armchair technicians.
- [40:42]
Guy Adami
Yeah. So it's almost a quadruple top. If you look at it, it's February, it's May, it's June, it's July. Every time it goes between 65 to $70 or 72, that's the level you want to sell. You see what it's doing on this earnings print. So it makes me a little wary to jump back in. But if you do get back in, you got to sell at 65 and above.
- [41:00]
Melissa Lee
Meantime, Jared Holtz is highlighting Inspire Medical Systems, which is a sleep apnea mask. They're saying that you'll GLP1 trialing. So people using GLP1s to treat sleep apnea that is denting sales. And so we heard this story before, but here we are, another data point saying the prevalence of GLP1s for treatment of other uses is interesting.
- [41:19]
Steve Grasso
Wow, I didn't see that. Down $25.
- [41:21]
Melissa Lee
Yep.
- [41:22]
Steve Grasso
And what was it? Was there Dexcom also was that also that's a Right. Blood monitor. Right.
- [41:29]
Melissa Lee
All of these devices, right. Sleep apnea, diabetes, were threat alcohol, everything. Gym membership. I mean at one point it was like everything.
- [41:37]
Karen Feinerman
We were just. Well, first we just talk about potato chips and now we're really talking about everything.
- [41:42]
Melissa Lee
Yeah, exactly. Coming up, a ride share push into Europe. Lyft making some moves overseas and it's got one of our traders piling into shares. That's next. More fast Money into. Welcome back to Fast Money. Hailing a cabbie in London could feel a little bit different next year. A Chinese tech giant Baidu teaming up with rideshare company Lyft to expand its robotaxis in Europe. The cars will initially be deployed in the UK and Germany with the aim to have more thousands more across Europe in the coming years. Both companies have been pushing into international markets by due partnering with Uber in the Middle east and Asia. And Lyft acquiring Germany based ride hailing company Free now, just last week.
- [42:27]
Guy Adami
Yeah, this is so. So for me, obviously Uber has a lot more levers to pull, so they're going to always be bigger. They outperform by a large margin. But when you look at Germany and UK for Lyft and then you have Asia and the Middle east for Uber, I think there's enough for everyone to play strictly on valuation. Lyft could be a double from here. I've been in and out. It hasn't happened as exactly as quickly as I like, but I'm back in. And I think there's some upside here.
- [42:55]
Melissa Lee
Is it in your band or not? Is it bland or band?
- [42:57]
Karen Feinerman
How's it doing this year?
- [42:58]
Melissa Lee
I'll let you know today.
- [42:59]
Karen Feinerman
I mean, I'll figure it, I'll throw it in there. I'm long the stock, I think the ride trend, the ride share trends overall, the reason I want to own it and because I think it's a takeout candidate and because I just think that they have a management team that now has more credibility than the one they had before. The dynamic that depending on the day, the headline and which way the wind's blowing. Uber and Lyft are affected by these headlines, either for them or against them. I think the argument that they have a platform, the technology that will be used in conjunction with the hardware makes a lot of sense.
- [43:28]
Melissa Lee
I think it's interesting though, because you think about this rideshare market, we're thinking about the U.S. but you think about Baidu, which has more than 1,000 vehicles deployed worldwide. And so you think, oh, OK, so maybe the U.S. china can't get there, but they'll go everywhere else. So when you're thinking about rideshare in total, the bigger play can actually not may not be Tesla, may be Baidu or some other technology provider pairing up with a platform.
- [43:52]
Tim Seymour
I think, I think sort of the point Steve is making. But I'll say this as well, it's still Uber's world to win or lose. And they report, I think Thursday of this week, if not Wednesday, one of those two days had a big run into earnings, pulled back a little bit. I think Uber is going to continue to surprise the upside.
- [44:08]
Melissa Lee
Up next, final trades. It is time for the final trade. Let's go around the horn, Timothy.
- [44:27]
Karen Feinerman
Yeah, thank you, Alyssa. Jim Lapel, Pfizer. This is one that in any language hasn't been a great, great place to be. But I think you've got stable EPS between 250 and 3 bucks. I actually think the stock and somewhat de risked Pfizer.
- [44:43]
Steve Grasso
Yes, affirm. I like it. But this 12% move, I think on the Wall Street Journal article about people buying everything with buy now, pay later, sell some upside calls against Stephen for.
- [44:54]
Guy Adami
Everything that we said in the last block. Lyft taking this one for a ride.
- [44:57]
Karen Feinerman
Tim, did you forget your final trade.
- [44:59]
Guy Adami
Or was that just.
- [45:00]
Karen Feinerman
You didn't forget it, right? I never have I ever forgotten it. I'm always up to date on that. I was just being funny, Steve.
- [45:06]
Steve Grasso
Lif.
- [45:07]
Tim Seymour
I love when Tim speaks French, though.
- [45:09]
Melissa Lee
Yeah.
- [45:09]
Tim Seymour
Je ma' Appel Jean Appel Timote. That's not my name, but Agnico Eagle Minds. Melissa.
- [45:16]
Melissa Lee
All right, thank you for watching Fast Money. See you tomorrow here at 5. Mad money starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal and their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.