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CNBC's "Fast Money"
Dow Hits Fresh Record High… And Gearing Up For Target & Walmart Results 8/15/25
00:43:45
The Dow Industrials finally recouping its tariffs losses from April and hitting a fresh record high. The insurance giant helping fuel those gains, and the big stake Warren Buffett’s Berkshire Hathaway is making in the name. Plus Earnings season continues, with big box retailers like Target and Walmart gearing up to report. What to expect from those results, and how our traders are positioning in the retail trade. Fast Money Disclaimer
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- [00:03]
A
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. Joining the party, the Dow notching an intraday record for the first time this year. Joining the S and P and Nasdaq in the all time high club. How to finally get there and can it keep its momentum going? We'll talk about it. And the retail readout. Some of the country's biggest consumer names report earnings next week, what they'll have to say about the impact of tariffs and more. Plus, semi stocks slumping after disappointing report. Report from a Matt Lyft gets a lift amid a board shake up and bet on DraftKings. What the Chartmaster has to say about where the sports gambling stock could go from here. I'm Courtney Reagan in this evening for Melissa Lee coming to you live from Studio B at the Nasdaq. On the desk tonight we have Steve Grasso, Courtney Garcia, Mike Koh and Carter Worth. But we start with the Dow's day in the sun. The index hitting a fresh record high today, its first of the year. The S and P marked the feat way back in February. The Nasdaq followed suit in late June. The Dow, though, has been largely held back by shares of United Health. Until yesterday, the embattled insurer was solely responsible for cutting more than a thousand points from the index this year. But that all changed when Warren Buffett's Berkshire Hathaway revealed a new stake in the company, buying more than 5 million shares in the second quarter. And that sent UNH shares soaring nearly 12% today, its biggest gain since March 2020, and single handedly kept the Dow in the green today, even if barely. And while the S and P set an intraday record early in the session, it and the Nasdaq both ended the day in the red. So what do you make of today's market action and what stage does it set for next week? Steve, it's kind of impossible obviously to talk about the market action excluding UnitedHealth if we're talking about the move in the Dow, which sort of isn't a story in in and of itself, but just generally relatively quiet day for news in the markets that move the markets. But big sort of macro economic influences at play.
- [02:06]
B
Right? And I think you laid it out perfectly. The Dow was affected by about 180 points for UNH, you said a thousand points for the year has been the deficit side. So you know, I always, I'm a little skeptical looking at 13 Fs because they're always looking backward.
- [02:25]
A
Sure.
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B
So if you think that it's going to pull, it does have the effect of pulling more investors into some of these names. So you could see some follow through that could last days, weeks maybe. But UNH has its health care costs that have been rising. So those are the issues that really affect whether or not they're going to be a revenue generating in a strong environment company. Having said that, we go through a weak seasonal period between August and October for the overall markets and you know, the most overused line. This time is different. This time could be different. We have Trump, we have Putin and we also have the most important thing going on, the biggest Fed meeting, Jackson Hole coming up. Right. So September, if there is a rate cut, that could change that whole historic weakness and seasonal weakness. So everyone's looking at that. Do we get a cut? How much? And I'm looking for a 25% cut for September. I think 50 is a little.
- [03:29]
A
Basis points.
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B
Yes, exactly. Sorry, basis points. So I'm looking for that and I think that will keep the, the tailwind in the market.
- [03:37]
A
It very much could be a September to remember. Courtney, what do you make? I want to go back to Steve's point about UnitedHealthcare. Yes, 13 Fs are backward looking, but this is Berkshire Hathaway, this is Warren Buffett. He's not a trader. Right. He's an investor. But also a little uncharacteristic of the way that, that Warren Buffett invests because of all of, let's just say scandal sort of surrounding the trouble that UnitedHealthcare has been in. But with, with an investment from Buffett, does that change your mind on what that opportunity could look like for others going forward?
- [04:08]
C
I actually wouldn't call that uncharacteristic. I think when you look at Berkshire Hathaway and you're going to look at Warren Buffett, he's a long term value investor. I think a lot of their problems probably are considered more short term here. So you're looking at their medical utilization costs which have been increasing. You're looking at a lot of the issues with the Department of Justice who's been investigating them and their billing practices. But this had such a sell off. I mean, at some point in time, I mean they are one of the largest insurers. And at some point when it comes to this kind of a value, he's saying, okay, maybe at some point they get over this hump. He's looking at holding these for the long term. So is a short Term trade, I wouldn't get into UNH here but as a long term investor I think he sees a value there. So I'm not jumping in, but I think this is a long term, not a short term strategy or which is right up Warren Buffett's alley.
- [04:52]
A
Hmm, very interesting. Mike, what do you make of the action in UnitedHealthcare today? And I guess what would an options play here be potentially if you, if you see that there is one for UnitedHealth?
- [05:06]
D
Well, I think a lot of people have seen that there is one. I mean I've sort of followed the UnitedHealth story for quite a long time back to my CRT Capital days. I mean this is a company that if they can navigate some of these uncertainties and I think to me the biggest cloud is certainly the investigation, but this is a company that's probably going to do $25 billion worth of free cash flow on a, we'll call it a $300 billion valuation round numbers. I'm kind of splitting hairs between the market cap and the enterprise value here. I mean that is as cheap as the company has, has traded in 20 years other than a brief period during the GFC. And you know, we've got Steve Hems, Steve Hemsley back at the helm. I think there was a little bit of a misstep there on the management side. So people are speculatively bullish here. We are seeing some short term call buying. I think that's just basically news driven. But we've seen some longer term call buying as well. Traded over a million contracts today. That's, that's a substantial number when you consider that we might trade 40 or 50 million contracts overall across all securities in a given day. You can see, I mean you're talking about more than 2% of all options flow is, is calls in UnitedHealth. I think that there are some people who think that the longer term story is that they could turn this thing around.
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A
Fascinating. I do want to sort of move back out to the bigger picture of the market and what we're looking at right now, particularly from where we have come. Carter. I mean it does seem like sentiment is fairly bullish right now from a market perspective. I'm also though wondering your thoughts on whether the market has gotten a little bit ahead of where the Fed might be ahead of Jackson Hole with some trying to call for a 50 basis point cut. When Steve Liesman is saying that is not what the Fed fund futures are suggesting at all. I think that might be wishful thinking for some. Where, where do you sum up where we're sitting right now going into the week that will hold Jackson Hole and this very potentially historic event?
- [07:00]
E
Yeah, I mean I, I think it's, it's one of the most sort of difficult but actually in that sense silly endeavors. The first is payroll. Some 40, 50 economists each get ready and predict the payrolls and it's just off, off, off undoable. And Then there's this FOMC thing. Probabilities go from 90% of a cut to then back to 20, then cut 50, then no cut, then 25. That the reality is of course that all of that is discounted in the S and P right now. And the S and P from its April low has had an impressive ricochet following of course the aggressive tariff related sell off of more than 20% and the S and P is slightly above it's pre sell off level. But as you started out here at the beginning of the hour, the Dow has yet to make a new high. The equal weight has yet to make a new high S and P the mid cap has not the value line arithmetic index, the Dow Jones transports and so forth. So we have this odd contradistinction of the 1, the S and P. Right. Having made a slight new recovery high. And yet intraday the Dow attempts today but can't and on the week for instance was it a good week? The two best performing sectors, industrials and tech year to date we're both down. It's a curious setup. Something needs to get these other aggregates need to come to life and confirm so to speak the strength in the S and P where the S and P is on its own and the others are signaling things. They're not as sanguine as the message purported by the S and P.
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A
Well our next guest predicts more all time highs are coming. I know Carter pointed out some that we still haven't hit yet. Ben Emmons is founder and Chief investment officer at FedWatch Advisors. Ben, thank you for being here. I mean I understand that your viewpoint is generally bullish overall. You think we should buy on some weakness? Why?
- [08:55]
F
Well if you take today's retail sales number, you know there was a clear acceleration happening within the number and was encouraging is that the core piece which called Control Group was revised upwards so that gets directly into gdp. So it seems that we're coming out of the summer low swoon into some sort of acceleration phase while we're having some weakness in the labor market that is keeping this rate cut probability in check that we'd like to see The Fed deliver on this rate cut. So you're getting a cocktail here of already an economy coming out of a summer lull with potentially rate cuts following. You can see the scenario that actually getting an acceleration in the fall, which means it will be matched by the stock market. So any kind of pullback that we're getting next week on some trepidation of policy, yes or no record that has an opportunity, I think to buy. So it's actually an improved economic environment currently. And I think this is why stock market will continue to go higher.
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A
You know, it is interesting, sort of the parlor game that is when everyone's trying to guess what the Fed is thinking, what they will say. And we have this very important meeting of Jackson Hole next week where we will hear from Chair Powell for the first time in some time. And in the interim, you've had market watchers speculate 50 basis points of a rate cut could be on the table. But as I pointed out earlier, the Fed fund futures aren't really seeing that. Maybe it's just wishful thinking. Where do you really think the chair is thinking about where? Particularly I guess with this week's retail sales p and the other economic data.
- [10:35]
F
Well, he will definitely be more cautious. I think he has been more conscious in the stone each time that inflation sees a little bit perking up. Whether these other Fed members were really ringing the alarm bell like, look, this labor market is weakness and maybe continue to weaken from here. I think that's where the 50 basis point rate cut could be coming from. I'm actually myself a bit in the camp of Dave Zervos where they actually do 50 basis points like an insurance. Because if you let this labor market continue to weaken in the rate starts rising and start rising faster, it moves away from you. So what they did last year was for the same reason. It cut by 50 was a surprise, but it did it because they want to get ahead of the problem. I think there's a possibility this time they do the same. Yet Paul will be, I think in his tone, in his speech, cautious on that front. But he's not the only one determining the vote. So we'll see how it plays out. But I do think that this 50 basis point cut is a possibility. Let's say that if it is in September, then it could be in October.
- [11:37]
B
Ben, do you think the Fed has forgotten about the balance sheet runoff? When you, when you look at what they're letting run off, the NBC is running off at 35 billion per month and we have Treasuries Running off down from 25 billion down to 5 billion. Shouldn't they have stopped that runoff? Because MBS does have that lift effect on the 10 year and mortgage rates are affected by the 10 year or based on the 10 year and a third of CPI is housing or shelter costs.
- [12:10]
F
As a fair point, Steve, I mean it's interesting they did signal earlier this year they wanted to stop it altogether but yet have to do this. And you know this does add some tightening to the system in itself. That is like a lot but it is underneath. There's pressure there. So this meeting too that comes up will probably be where it gets determined that they want to end the runoff of the balance sheet. Nonetheless, it's something that is with us here. Right. This is a continuing tightening of financial conditions. Like subtle, but it's underneath. And I think this is where the mortgage market has been struggling for one reason. As you mentioned, it gets determined by the 10 year yield a lot. We know that the 10 year yield for example today was up because of retail sales. So there's also economy that plays a role against this technical background of the balance sheet. I expect the balance sheet though to run off the end. So eventually it gets alleviation for MBS and that should with all the attention to nbs, if people want to buy NBC, probably be a tightening between NBS and Treasuries.
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A
Ben, we know at the top you said that you are generally bullish. Can you give us some actionable ideas before we have to let you go? Where should we be looking to buy?
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F
Right. So what's interesting is that since April 8, the time by you know, what other sectors have outperformed except for tech where like electric equipment and related to power sectors. Now you extrapolate this out to what may happen in this fall as the commitment to invest in the US really gets some attention in the administration to move that forward, that thing materials and staples and energy which have kind of lacked most of the rally, I think an attractive opportunity here. If you believe that there's going to be more investment coming into the U.S. i think those sectors can outperform.
- [13:55]
A
Ben Emmons, thank you so much for joining us. Have a happy Friday night.
- [13:59]
F
Thank you.
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A
Courtney, what do you make of what Ben's theory portends?
- [14:03]
C
Yeah, so if the Fed is in fact cutting interest rates here which is like 95% expected, it's going to at this point I think there's a lot of areas of the market that are going to perform and like this week I think was a good indication of that. Where you saw small caps move for the first time in months, which everybody was talking like this was the hot topic the end of last year. Everybody said oh there's be less regulation, there's going to be tax cuts, there's going to be interest rates coming down. All of that was kind of thrown out the window because tariffs have been the big conversation. But now as we're starting to see interest rates are likely actually coming down. This is happening in the near future. I think you're going to see some of those more interest rate sensitive small caps being a good example. Probably starting to make a turn here.
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A
Carter, what do your charts tell you about small caps? As we mentioned, they had the best week the Russell 2000 since June.
- [14:48]
E
Yeah. So I mean there are catch up trades. You, you see for instance homebuilders, let's say that's a very economically sensitive rate sensitivity. The and they had a fantastic week. Whereas regional banks which are highly weighted in small cap, not so much. So the aggregation IWM, whether it's using the ETF or the Russell 2000 itself, again a good week. But here to the strange circumstance of essentially being below where it was four or five years ago. Where's the alpha? That's the question.
- [15:20]
A
That is indeed the question. Well meantime, President Trump meeting with Russian President Vladimir Putin today in Anchorage, Alaska for a very high profile summit. Eamonn Jeffers has the latest. Eamonn, some of those images that we saw today, really striking.
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G
Yeah, that's right, Courtney. The two men are now behind closed doors for the potentially hours long meeting without the media present. But already what we've seen is a historic greeting, a handshake there on the tarmac at Joint Base Elmendorf. And this is the first time a Russian leader has ever been in the state of Alaska since Alaska was purchased by the United States from Russia back in 1867. We saw the two men on the red carpet there, then getting on top of a podium that had been set up there, posing in front of Air Force One. But also on the side just outside this shot, Courtney, are F22 aircraft, sort of a display of power by the US Air Force there. And then an interesting moment in the motorcade here as both leaders got in the same vehicle. That's the beast, that's the President's limousine. And there you see Vladimir Putin riding right in it on the left hand side. A smile, a wave for the cameras. The leader of Russia certainly looks pleased as punch to be riding in the beast there. And then a quick video that we Got here of the two leaders meeting in a bilateral session. The President with his two top advisors there, Secretary, Secretary of State Marco Rubio is there. Special envoy Steve Witkoff is there as well for the US Side. And then the press was ushered out and the closed door session began. So, Courtney, we're going to monitor this for as long as it goes. And the reports are that this could be multiple hours of talks behind closed doors. We'll see what, if anything, comes of it. The big indicator for success this evening is going to be if you see the two leaders come out to do a side by side press conference with something to announce that might indicate a successful meeting. If you just see Donald Trump on his own briefing US Reporters, that might indicate something less than success here.
- [17:26]
A
Courtney, so much in the images and the messaging and reading between the lines, we know you're going to continue to do us do a war statement even as we go off the air potentially as this meeting goes on into the evening. Thank you so much. You know, Mike Coe, as you look at this, what, what are you thinking? I mean, what could happen here? How could the markets react?
- [17:50]
D
Well, I think the only thing that could potentially happen is we have stasis. We basically end up where we are right now, which isn't a great situation. You know, for all the job boning, we really haven't made a lot of progress with Russia and Ukraine. So I kind of feel like it's either the same old thing or something better. I don't really see how it could come out a whole lot worse. I mean, obviously we'll see that. I'm going to knock on wood a little bit as I say that, but yeah, my expectation is that we're either going to be right where we are right now, we'll have some interesting press photos, or it's going to be slightly better. And you know, I'm cautiously optimistic. Maybe give it a 30% probability that we end up with something better than where we are right now.
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A
Hold those thoughts for a moment because we have a news alert on open air. Mackenzie Segalis has the details. Mac, what do we know?
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H
Hey, Courtney. So Bloomberg is reporting that OpenAI staffers are are preparing to sell about $6 billion worth of stock and a secondary share sale that would value the company at roughly $500 billion. Now Thrive Capital is expected to lead that deal. I spoke with a source close to the process who said that figure is directionally accurate, but the final total will depend on how much current and former employees ultimately decide to sell. Now, that source also Confirming that Dragon Year and SoftBank have been added to the investor group. OpenAI we know has been in talks with investors about the deal, which would not raise new money for the company, but instead allow employees to cash out some of their holdings. This of course, of course is separate to that $40 billion funding round announced in March that put the company's value at $300 billion. So this is a big jump up here, Courtney.
- [19:26]
A
Absolutely. Mackenzie, thank you so much for bringing us the details. Have been a lot of moving parts in that area recently. Steve, what do you make of sort of new valuation for open AI and what it means for the space in.
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B
This, in this arena? You have to get people their money back. Right. So with every round somebody wants to sell, somebody wants to buy in. So I think this helps people get their money that were initial investors. But I would invite the, the viewers to just, just Google or go on, go on one of these services, see how many other Companies have a 500 billion valuation and see what they see. The notable companies that it's more than. So I guess we're living in, in this AI centric world so we have to expand our brains to what real valuations are in that world. But there's just such an amazing amount of stuff going behind the scenes that we don't know what these valuations are truly based on until the rubber hits the road.
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A
Yeah, absolutely. All that makes sense. Well, coming up, investors are loving a big change lift the key decision sending this ride share name higher. That's next. But first, a dire warning from Applied Materials. What the chip maker said about its China business that had investors running for cover right after this.
- [20:42]
B
You're watching Fast Money here on cnbc. We'll be right back.
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A
Welcome back to Fast Money. Shares of Applied Materials locking in their worst day since March 2020 after the chip company gave weak guidance for the current quarter. Our Christina Parts Nevilles has the details for us. Hey, Christina.
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E
Hi.
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H
Sorry, I'm going to have to apologize for the baby screaming in the background. But surprised is what Wall street analysts are saying about Applied Materials. Weaker guide the chip equipment maker is $1 billion shortfall points to the end of China's long spending boom and the danger of relying on a handful of leaders like tsmc, intel and Samsung Taiwan. Semi's dominance means it can dictate capex pacing, creating lumpier orders and potentially pressuring margins for suppliers like Applied Materials Management. Warning that the uncertainty could persist making it tough for the stock to outperform despite its reasonable valuation. Other equipment names like KLA lam and ASML fell in sympathy today. You can see on your screen with KLA down the most almost 8% the SMH and stocks chip ETFs also falling. But analysts at Oppenheimer and Bank of America pushed back arguing this is an isolated issue driven by applied Materials to specific product mix and conservative guidance, not an industry wide plunge. But investors aren't buying the isolated incident narrative. They're treating applied Materials results as more than just cyclical noise, instead questioning the longevity of the broader chip spend cycle.
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A
Interesting, interesting stuff. Obviously name we focus on a lot as well as some of those competing players. Christina, thank you so much. Courtney, what do you make of sort of the action there? Any opportunities to see a stock, a chip name down 7, 8% is it isolated or is it not as Christine.
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C
I think that's the question right now. I mean I think a lot of, a lot of the analysts right now are calling for the fact this is more company specific than broader. But I do think it's interesting that they highlight the fact that China is really digesting some of their prior purchases. So I think if that's the question, did you get this pull forward which a lot of people did think was going to happen? Are we starting to see the inklings of that? So you know, it's not something I jump into right now but I do think we want to continue to see how these reportings to come out to see if this is a trend that's going to start to happen here.
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A
Mike, what do you make of this, the outlook, whether it's an isolated incident or not?
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D
Yeah, I mean it's kind of interesting when you get really disappointing news like this and then we see a big downdraft, call it 10% or so and everybody says oh, is this, is this a great buying opportunity? Well, if you have a big sort of secular shift from tailwinds to headwinds, you know, a 10% discount in the stock price might, might not actually be large enough. I think it probably makes some sense to allow the market to digest this news a little bit before we really make any conclusions about it. This thing certainly also saw a lot of activity today and in the opposite basically theme that we saw in UnitedHealth where we saw some longer dated call buying. There's a lot of put activity here as we look further out. 160s, 155 so not sharply lower from here, but lower seems to be what a lot of people are betting on.
- [23:51]
A
Carter. Obviously a downtrend in that AMAT chart. But what about the rest of the chip space. Any trends there that you're looking at at going into this next week based off what we know from what a Matt just said?
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E
Well the one pattern is the same pattern here in the SOX as is for the Dow and the S and p equal weight etc. Etc. The S and P equal weight. The Dow have made the high and guess what, nor has the socks. The Sox High was July 10th last summer. Here we are August 15th and we're still below that high. Which means if you're unchanged for a year, the relative performance of the SOX index to the tech sector is now at a four and a half year low. It's just not good. It's another question mark for the overall market.
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A
Well, there's a lot more fast money still to come. Here's what's coming up next.
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B
We have liftoff. The ride hailing stock putting pedal to the metal after a big change to its board. Is this the green light for bigger gains? And we're all in on next week's retail earnings. What to expect from Walmart and Target ahead of their reports next. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
- [25:16]
A
Welcome back to Fast Money. Lift topping the day surging 8% as the company's co founders stepped back from their board positions as part of the transition. All class B common stock has been converted to A shares with equal voting rights ending the founders outsized influence on board votes and governance. The stock seeing its best day in three months. Steve, what do you make of this move? Does it make you more excited about shares? Clearly the broader market likes it.
- [25:41]
B
I've owned it, I own it for, for a bit now. And it's something where I've said I've been looking for it to actually double in stock price going back a couple of dollars. But this is something where I hope it's a message that sent to other corporations that investors don't like dual class stock. Right. So this one allows investors first of all this is a more focused direct play in the in the ride hailing service versus Uber which is very diverse. You're getting a really direct play. Their expansion with Freenow into into Europe gets them in 11 different countries in a thousand different cities. They're partnership or JV with Baidu gets them premium autonomous drive. So I think they're pulling all the levers that they can possibly pull. I'm still looking for higher prices and I'm still looking for that double on the Stock price.
- [26:31]
A
Courtney, what do you make of this and do you like it as a ride share name over Uber because of the pure play?
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C
You know, I actually I would like Uber mainly because Uber is really well diversified. It's not as pure of a play, but I think that's actually a benefit for Uber. I think, you know, they get a lot of their revenue from Uber Eats. They're also kind of ahead in the autonomous driving space. A lot of people think is going to be the future in this business and that's also just a larger business. They have a lot more pricing power and just a lot more marketing behind that team. So I would actually take an Uber over a Lyft. No, is not a pure play, but I actually think that's a good thing.
- [27:02]
A
Interesting Mike, obviously this action today does seem to be driven by the announcement of the change in the in the stock structure.
- [27:10]
D
Yeah, I mean I think this is as Steve was pointing out, I mean this is really important, I think to investors generally. You know, it's a little bit disconcerting I think for investors when you have a couple founders and I understand why, you know, you found a company, you don't want to lose control of it. But the fact of the matter is that as a company matures and you get other management in, it can be a little bit of a problem if the original founders maintain outsized control relative to their ownership stake. Now we have seen situations where that has proved to be a problem and then since corrected Meta would be a good example of that where there was a lot of the metaverse investment and then it looks like Mark Zuckerberg sort of turned table on that and has decided that the capex would be deployed elsewhere. You know Uber I think is operationally a little bit better positioned than Lyft is. But Lyft is on a valuation basis still quite compelling. It's only trading at about 15 times full year and a significant discount to that on on next year's numbers. Very good free cash flow and those both adjusted EPS and free cash flow are growing steadily. So I still think this is a good one to be in as well.
- [28:16]
A
We should note after the conversion the founders Green and Zimmer will collectively own about 9.7 million shares. Well coming up, two big retail reports on deck next week and two very different years so far. What to expect from Target and Wal Mart results. And could we get some new CEO news as well more fast right after this.
- [28:40]
B
Missed a moment of fast. Catch us anytime on the go follow the Fast Money podcast. We're back right after this.
- [28:54]
A
Welcome back to FAST money. Stocks mixed on Friday, but all three major indices hanging on to gains for the week. The Dow up 51 points, hitting its first intraday record since December. The S and P also hit a high during the session, but ended down 3. 10 of a percent. And the NASDAQ also ended lower. Solar stocks surging on reports the Trump administration plans to preserve clean energy access to tax credits. Meanwhile, Meme stock opendoor jumping as much as 16% after announcing CEO Kerry Wheeler would step down immediately. The company has not posted a profit since going public in 2020 and a month ago was trading under a dollar a share. Finally, Japan's market hitting record highs after the country posted a better than expected economic growth rate in the second quarter. The EWJ ETF, which tracks the country, is up nearly 20% this year. Well, retail earnings kick off in earnest next week with Target and Walmart among the key names reporting investors focusing in on what the retailers have to say about the consumer and the impact of tariffs. So far, Walmart shares are up over 10% this year, helped along by its E commerce and grocery businesses, while the more discretionary focused target has dropped nearly 24%. So for more on what to expect from these companies, Mizuho senior analyst David Bellinger joins us here on set. David, thank you so much for being here. Obviously we do a lot of comparisons and we put Wal Mart versus Target and Home Depot versus Lowe's. We know that there are differences. What should we expect from Wal Mart? I mean, that is the biggie. It is almost always the biggie. What are you looking for?
- [30:19]
I
Yeah, thanks so much for having me on. So yeah, that we think Wal Mart's going to have another very strong quarter. We're looking for same store sales growth in the US of about 4%. And what we're really looking for with this report is basically the tariff push to consumers. On the start to Q3, we think Q2 is fine. But going forward, what do we look at for the back half of the year, the risk assessment and just what's the appetite of the consumer to take these increases? We think it's been fine so far, but there are risks ahead. We think Wal Mart will be fine here. And just a few other data points. We have some tariff noise with the gross margins can be a little messy. And we'd also love to hear.
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A
Just because of the accounting method.
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I
Exactly. The the accounting method will come through here. So there's some noise in the numbers. And then looking forward, Walmart's Done a lot of this agent investment. I'd love to hear more about that. Something they haven't gone too much detail about, but that could be the next wave of E commerce growth for them.
- [31:12]
A
And then, and then if you flip it and then you look at Target, which again often gets compared even though the businesses can be different. There's a lot going on with Target. Obviously there are some investors that seemingly are not happy with the trajectory the company has been on and the choices that have been made by CEO Brian Cornell and his team. And then obviously you have this, this breakup that kind of surprised me with, with the Ulta business because they've been talking about how strong beauty is and it was up 7% over last year and then out of nowhere we're ending the partnership. What in the world is going on at Target?
- [31:40]
I
Yeah, that was a very interesting development this week. And you actually had last quarter was one of the first quarters in a long time that Target had negative sales growth in the beauty category. We think some of that is due to Wal Mart. But then also you've got a new CEO of Ulta. There could be some issues there with the in store labor, some inventory shrinks. So we think that's why this sort of got peeled back. That's more to do with the call it messy store operations of a Target. But we are getting closer to this potential new CEO announcement for Target. We actually ran an investor survey a few weeks ago and unanimously almost 96% of investors wanted an outside hire, someone knew someone to come in and give a fresh look and bring some type of wholesale change to Target. So maybe we get that this week or this coming week or it's a little bit after that. But I think we're closing in on the new CEO announcement and also because.
- [32:26]
A
We know that Brian Cornell had signed a contract extending his employment and changing the retirement age, but that also is coming due. So it's not just potentially the operations but what we know about the contract that is getting us sort of to play this parlor game that we think there's going to be a new.
- [32:40]
I
Exactly. So his retirement age was supposed to happen in September of 22. They pushed that back three years. So we're basically there now.
- [32:47]
A
Right, got it. And then lastly, when you're looking at a Home Depot, this one I find very interesting because last quarter when we come back to this tariff comment, they said that they generally intend not to raise prices. They also use room accounting. They also can employ a portfolio approach to raise some prices and not others. Are we going to be able to really tell what happened when the numbers.
- [33:07]
I
Come out, we should. I think it would be a little messy of a quarter because everyone knows that the spring season was not great and that that's been well telegraphed. I think these companies across the board really we've seen some phasing in of the price increases so that will hit in the later stages of the quarter. But to be honest with you, I don't think anyone really cares about this quarter because we're starting to talk about rate cuts again and it looks like it's actually happening. You've seen Home Depot and Lowe's outperform this week and I think that's sort of the thing people are pointing to as opposed to was Q2 going to beat Ms. So I think that's well in numbers already and people are looking forward to rate cuts and this sort of sparking the recovery we've all been waiting for for years now.
- [33:46]
A
There's going to be so much going on next week and so much to try to parse out through the numbers. I appreciate you being here to get out of it.
- [33:51]
I
It'll be fun next week.
- [33:52]
A
Exactly. Thank you David. Thanks so much. Mike, what do you make of the retail landscape going into next week? What we know, what we don't. Opportunities to play it.
- [34:02]
D
Yeah, I mean I think the options market at the very least is seeing some, some pretty big moves. Some of the, some of the stocks that had a rally like Home Depot and Lowe's actually were trading some above average put volume but that could just be some hedging of, you know, the outperformance that we've seen in these names this month, you know, concerned maybe a little bit about some of the give back. I think Home Depot in particular their multi channel approach and the number of SKUs that they have is very strong. And one quick point I would just throw out about the inflationary tariff impact and cost impact that you could see and that is that it's not a continuous function. It's not like there's some continuous slope to the increase in prices that they're going to see. It's more of a step function, meaning that you're going to have a ramp up in prices. We're going to see what that impact is. There's probably going to be short term headwind impact from that. But that ultimately I think it's not going to persist in the long run with the glass half full kind of perspective that one might put on it. That's the way I would think about it.
- [35:03]
A
Carter, when you look at the charts and you look at a Walmart versus a Target, we started out the segment talking about the divergence. Do you think that there is opportunity for that trend to converge or change or stay the same? I mean, what's more likely at this point?
- [35:18]
E
Well, historically, right. Target was a massive outperformer of Wal Mart. If you look back at any sort of multi decade chart and then it's been a reversal of fortune, Targets down for the fourth year in a row. Obviously it is a more cyclical business and Walmart has this consumer staples type element to it given its groceries and other aspects. But in principle, as a rule of thumb, buying stocks in downtrends is bad technique and Target is in a downtrend. I just stay away.
- [35:46]
A
Any opportunity here for you, Steve?
- [35:48]
B
Yeah, so I always look at Lowe's and Home Depot and with Home Depot, 10% of their client base are professionals that shop there, that are building homes, that are contractors. But they account for 50% of the revenue. So if we saw today retail sales, what was weak? Appliances. So why is that? Because people use finance to buy those.
- [36:10]
A
Appliances and they've been deferring these big projects for some time.
- [36:14]
B
Exactly. So now if rates start to come down and you see a Home Depot that has an outsized percentage because Lowe's, the percent of revenue is only 20 to 30% from pros. I think Home Depot will get an outsized share if that happens.
- [36:28]
A
Interesting.
- [36:29]
C
Yeah, and I actually agree with that. And I think to add on to that, we always talk about rates coming down here and that's good when you're financing something like you're doing a home project or something like that. But it's likely not going to bring down mortgage rates which are the longer.
- [36:40]
A
End of the curve.
- [36:41]
C
So this is more of a reason why people with their existing homes may be doing projects as opposed to selling their homes. It's going to create more demand for those home projects, which is good for a Home Depot.
- [36:49]
A
And that's exactly what Home Depot and Lowe's keep saying. You know, yes, the housing market might be tight, but actually that's good because if you stay in place, eventually you're going to need to fix things up. Well, coming up, the chartmaster is digging into DraftKings why he's wagering time to get bullish on this betting name. That's next. And speaking of bullish, some bearish moves in that stock today. Investors seem to be taking a breath on crypto and the crypto exchange, at least after two days of Post IPO gains. What's next for this newbie Right after this. Welcome back to Best Money Chartmaster Carter Worth is placing his bets on DraftKings. Carter, what are you seeing in this name?
- [37:31]
E
Sure, let's get right to it. We have four identical charts and annotated different ways. But what we know is this stock had its peak in February as annotated there by those converging or online. It dropped 41 in the tariff sell off double the S P and it's recovered but has not made a new high. The next way to draw the lines Again, lines are subjective in the eye of the practitioner. You can see the second iteration here. Whether you want to call that a cup and handle or you want to call it converging trend lines or a wedge or triangle doesn't matter. This is a bullish setup. Next way to draw the lines to annotate the circumstances this some would call that a head and shoulders bottom put them all together. Fourth and final chart but the same thing is this stock in a position to as the S and P has recoup its losses and get back to and perhaps higher than its pre tariff sell off. That's my bet and I would make it very interesting.
- [38:27]
A
It's like a Rorschach test. I like saying that the the lines are sort of in the eye of the practitioner. Courtney, what do you make of some of these annotations?
- [38:34]
C
Yeah and recently they really noted that they had a healthy customer engagement. And I think what's interesting is when you look at the overall markets you've seen a lot more speculative behavior that's been happening among investors and how much that's going to translate into the gambling field which is also speculative behavior. I wonder how much you're going to see that. And that is what they've been seeing. And especially interest rates coming down means a lot of people have been sitting on cash that people are getting more and more open to putting back into the markets. And as much as I would say you need to be diverse, you need to be getting into these areas that are down, people are putting it into those speculative things. And I think that will ultimately translate into a good thing for the betting markets.
- [39:06]
A
That's a really interesting point. Speculative stock obviously the stock itself about betting. Mike Co. What do you think is happening in the options market here with this one? I can see some sort of correlations there as well.
- [39:19]
D
Yeah, well I mean some people like to use the options market to bet on things too, don't they?
- [39:24]
A
Exactly.
- [39:25]
D
The call volume outpace the put volume by almost 4x. Look, 2024 was the first year that this company as a publicly traded company generated free cash flow. And this year very likely is going to be the first year that they're going to have positive adjusted net income. So you know, the trend is definitely with the company. And in those early days before you actually get either of those two things, companies are trading on their promise, but soon it's going to be trading on the reality. So I'm with Carter on this one. I would continue to make best to the upside here.
- [39:56]
A
Very interesting. And of course it was up about 3%. Intraday. Well, coming up, crypto giveth and crypto taketh away inside Bullish's wild first week on the market. And what's next for the new exchange that's coming up? Fast Money in two minutes. Welcome back to Fast Money. Bullish posting its first down day since going public this week, dropping nearly 7% today. It's now more than 40% off the highs that it hit Wednesday, its first day on the market. So is this the kind of pullback, something that you should expect after its red hot start? Steve? I mean, one name of a number of IPOs that we can kind of look at for recent performance.
- [40:37]
B
This is exactly what you should expect. It was priced at $37. It opened at $90. That was a pretty good premium to it. It traded as high as $118 on its first day of trading. And then you see the market sort of settle in and people say what am I doing paying this much for that? Why am I chasing it? Let it settle in a little bit. Let it sort of get its stability. But let's think about the fundamentals of this. It's based on trading, right? So spot trading, margins, derivatives, but they cater to institutions. Hood Robinhood caters towards the retail audience. So with this one you're going to get a much more stable clientele, better recurring revenue. I think they're both great purchases. Robinhood. I was a bull on Robinhood as well. But this one I think is one that you should really pay attention to.
- [41:31]
A
And what do you think about the price levels and wanting it to find that stability should you get in now?
- [41:35]
B
Well, I would leave it for a couple of days.
- [41:38]
A
Couple days.
- [41:39]
B
And then you also have to remember for people that play these on the retail side, that 180 days later there's a lockup expiration where insiders can can sell their stock. So always put that on the calendar when you're going to get that weakness as well, but I would wait for a couple of days where you see higher highs, higher lows, and do you.
- [41:59]
A
Think that names like Core, Weave, Circle, Figma, have they found that stability yet or still too early for some of them?
- [42:04]
B
It's a little bit too early for some of them. And all of them really. That hunt really starts to come into play. But start to look at the fundamentals, start to look at stabilization in the price, really look for things to flatline and then start to rally.
- [42:19]
A
Okay, well, coming up next, it's already time for your final trade. It's time for the final trade. Let's go around the horn. Start with Mike.
- [42:33]
D
Yeah, UnitedHealth. I think this one is a good one to follow Buffett on and maybe sell some upside calls against it to generate some yield.
- [42:40]
A
Okay.
- [42:40]
E
Carter Q's up 45% from the April low. Four and a half months up. Sell it 40.
- [42:48]
C
I got small caps on interest rates coming down. VB is the Vanguard way of playing this.
- [42:52]
A
And Steve, so nice to see you on a Friday. Thanks for.
- [42:55]
B
Thanks for being here. I'm going to go with Lyft. I'm going to stay with that one. I think that direct play really serves my purpose.
- [43:01]
A
Thanks for watching. Fast Money Mad Money with Jim Cramer starts right now.
- [43:06]
C
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