A (4:04)

We shall Steve. We shall trade it. That's what we do here. But I'm just wondering in terms of the number tomorrow, I mean are you anticipating and I know it's an impossible question but you know the administration wants to portray a stronger jobs market but in order for the Fed to cut you want a weaker jobs market. So I mean they're stuck between a rock and a hard place in terms of what data to provide the American public.

C (4:27)

So I think the September jobs report rate cut is the jobs report to lose. And what I mean by that is it has to be a very strong jobs report with the unemployment rate going the wrong way, which would be the right way, which would be down. In other words a decline in the unemployment rate, strong jobs numbers, strong upward revisions that could possibly call into question the September rate Cut. But I think it's a very, very high bar. I think the question well, first of all, what I want you to know is we consensus has been missing August in like 10 of the last 15 years. August has turned out to be a very hard number to predict. And it turns out that it comes in a little bit on the low side before being revised higher in revisions for whatever reason that is. So if this is the month that the BLS wanted a good number, I think this is the wrong month. This is a number that's typically adjusted or revised and revised pretty, pretty heftily. So we're looking for a number of 75,000. Focus on the private payrolls, focus on the workweek. Here's what I can tell you Fed officials are doing because a lot of stuff is moving around and by that I mean immigration, labor force growth. They're focusing on ratios. And that primary ratio is the unemployment rate. If that number is steady or goes up a bit, that's going to lock in a rate cut. It's going to start thinking about October. You get Myron on the board there, you might or might not have a replacement for Cook. We'll see. That would be four of seven board members that are appointed by President Trump and leaning towards rate cuts. And what it amounts to, Melissa, is the number of Fed officials that are confidently looking through the inflation rate and saying, I see higher prices from tariffs. I do not think it's an inflation problem. We can cut rates and we will get lower inflation over the next several months.

A (6:18)

I want to also circle back, Steve, just briefly before we let you go to this attack on Fed independence. Are we really, we the media, whoever watchers making too much much of it given. I mean, if you read what the markets are telling us, it's not a problem. The s and P500 is at a record. Yields have backed off. We're not really seeing the sort of tumult that a true attack on Fed independence would theoretically have on markets.

C (6:44)

Well, the question is, what would theory tell you should happen? If you told the kids you were going to give them a lot of sugar right now and you gave them that sugar, they'd run around like crazy for a little while until they kind of, you know, did a crash. You're familiar with what how little kids react to that, Melissa. So I think this may be one of those Charles Prince moments where everybody has to dance because there's going to be liquidity, there's going to be lower rates. Whether or not that's good or positive for the Long term, I will say this, Melissa, between the President's desire for low rates, there are people and those people may or may not decide. The question becomes, I think, how much fidelity the nominees have to the President versus the institutional independence of the Federal Reserve. You know, you could put a guy, I mean look, the Fed gets, gets, gets slapped around for the notion of political being political. But all of the Biden nominees voted to hike rates to 5 and 5.38% for 14 months during the Biden presidency. So that strikes me as political independence right there. Whether or not, you know, you have Supreme Court justices who have been appointed and were expected to vote one way and sometimes they don't. So there are people in the middle and we'll see about how much fortitude Federal Reserve independence ends up having.

A (8:09)

Steve, thanks. Great to see you. Steve Liesman, pleasure. I posed the same question to you, Tim Seymour, what do you think?

B (8:16)

Well, first of all, too much sugar for the kids leads to cavities, which then leads to your teeth getting drilled and putting in filling. So I mean, I think the market follows the same thing. I think we can get a sugar high. I think markets have priced in Fed cutting over the last six weeks. I think it's almost done what we priced in for tomorrow. And the question is, and guys, guys rolling around in his Crocs right now when I say, you know, the Goldilocks is that we have a gentle softening of the labor market which allows the Fed to cut again, a Fed that's now focused on the labor market, not inflation, as Steve pointed out. So I think equities have priced a lot into this. I think a strong labor market tomorrow would be a short term disappointment. But really what are we talking about in terms of an economy that right now has a labor market that's relatively strong. And I think the forces for the market, which are better earnings, better margins, productivity gains that are coming from all these big macro trends, like I kind of believe it's not a no lose situation into tomorrow. But what I don't want to see is a terrible jobs number. I do not want to see something that puts that October cut very much in play and takes that to 75% in addition to December.

D (9:31)

We're just following the little kids in the sugar.

B (9:33)

Let's do this.

D (9:33)

If they're really little kids, then they do get cavities. It doesn't matter. Those aren't going to be their permanent teeth.

B (9:39)

Wow. Second derivative, like cavity discussion.

D (9:42)

Yes. So if they really get disciplined though, when the new teeth come in Then the sugar, Right. But you know, we all know that never happens. So I agree with everything you said. I think that a bad labor number is bad for the market because already we're pricing in a cut, right. So unless, unless it's super bad and then they look to price in, you know, a 50 basis point cut. But. So I sort of agree with you. I do wonder though, is there a PPI number in the future that is, that would is super hot and hard to ignore, Right. Right now it doesn't matter. That sort of mandate, that dual mandate seems to be temporarily off the table and the tariff uncertainty sort of allows it to say, well, we don't even know how that's going to shake out. So we can ignore that data for now, but in the short term I think we're okay.

E (10:33)

Long and variable lags, right? Isn't that what we know about monetary policy? So you cut 25 basis points. It doesn't really matter. We have a 30 year that's just below 5%. We have a 10 year that, you know, it's kind of sticky here in and around this kind of 4, 2% sort of level. So I wouldn't expect like a 25 basis point cut to really do a whole heck of a lot. If you go back and you look at what Fed chair Powell had to say in Jackson Hole, he said, what is our curious kind of balance between, you know, a labor market that's weakening and then that sort of supply demand? We saw that from jolts, right? We're seeing this kind of evening of, you know, job openings are going lower and we're not seeing like demand for jobs. You know, I mean it's kind of this curious kind of place. So I think I agree with you guys. You have a weak number, not good. You get a rate cut, who cares? Okay, Maybe it's good for the stock market. I can't imagine why we're at all time highs, right? If we get a really good number, lights out people. That's the last thing anybody wants to see in my opinion because I think you're going to have some really weird volatility as it relates to equities, as it relates to, you know, treasury yields and that sort of thing. Because nobody wants to see that.

B (11:35)

It could not change a strong number.

E (11:36)

Yeah, I mean like a really strong, like a re rigged number, you know, you know what I'm saying?

A (11:41)

Like unemployment, cut off the table.

B (11:43)

But is that going to change the Fed's view that this really is more about the labor market?

E (11:46)

What I'm saying it's about independence. Right. And this is at a time where the Treasury Secretary is, you know, interviewing folks to be the next Fed chair. And don't think for a second look at the Cabinet, they all bend the knee, they're not going to do a single thing to oppose any of this sort of policy. And so, yeah, this is a Senate approved position, but so are all the other cabinet people. So you tell me how important the independence of like an organization like the bls, how independence of, you know, the Federal Reserve, where we have to go back 50 years where there felt like there was any strain on that sort of thing. And what Steve just said about all those governors voting the way they did to raise interest rates when they knew that's going to put, you know, a damper on the economy and growth and employment that we saw, you know. So to me, I just think that there's bigger risks here than talking about what the stock market might do because we know, give or take a few percent, that's all we're going to get here right now. I'm just saying in the stock market either way over the next few weeks or something like that.

B (12:40)

The major difference was back in 2022, the inflation rate was at 9%. That's why they were all voting to raise rates. You aren't going to vote to cut rates with, with the CPI at 9. Not going to happen. To your point, the market doesn't care. Market doesn't care. So we shouldn't care until the market cares. Long variable lags. They're late. Then they should be cutting. They should have been cutting. So if whatever we're seeing, they're already behind because this is lagging down.

E (13:09)

Why, if inflation's starting to pick back up again, Steve, I mean, that's the sort of thing, there's this curious sort of balance. I mean, like, right.

B (13:15)

You have to balance the unemployment rate with stable prices.

E (13:18)

I mean, like just to be so definitive that they're late.

B (13:21)

No, no, no. But we're at, we're not, we're closer to their target than we were a year ago, two years ago, of course.

E (13:28)

But the cumulative effects. And then you throw on a trade war and we have no more clarity about a trade war than we did a few months ago. I mean, I think they're probably staying pat. I think they're probably kind of doing the right thing.

B (13:37)

I just, I just think they were late in raising rates originally. They're always behind the curve, whether they're raising or cutting. They're late now. The One key is their neutral rate is 225 to 325. That's their neutral rate, but so they're tight. I think the thing that Dan, you're focused on is interesting that if you have a really strong number, it forces the independence of the Fed question to really be what people focus on. And that's more detrimental if it looks like it's not independent. I thought today what was really interesting is two guys from opposite sides of the fence both came to a place that were seemingly the opposite of what you would have expected them. Stephen Myron said everything you wanted him to say in terms of independence of the Fed. He also said Trump's allowed to have an opinion. Of course he's allowed to have an opinion. He's the President United States. Of course he's got an opinion. And then John Williams, who if anything has been on the side of the more hawkish Fed and backing Jerome Powell, kind of fallen in line and saying, not because I think he's feeling pressure from the White House, but because he truly believes it. Whereas I don't think that Waller has necessarily. The market has the same perspective of Waller stance. It seems a little more political. What do I know? That's what was interesting today is two apportion forces actually fell to the opposite side of what you thought their inclination might be. Which gives me a better feeling about what the numbers can truly be without the market overreacting.

A (14:55)

All right, for more on what to expect out of tomorrow's jobs report, let's bring in Chris Heisey, Merrill in B of a private bank cio. Chris, great to have you with us.

F (15:05)

Thanks Melissa, great to be here.

A (15:07)

Does tomorrow's report, will it change your view of the markets and where we stand right now at record highs?

F (15:15)

You know, I think there's a few things to pass through there. I was just listening to some of the commentary and I agree with all. So what I have to add is the market's at an all time high obviously because of narrow leadership. But what's interesting is below some of the narrow leadership we started to see a change really since the beginning of August when there was some pricing in of a September cut. And that's where the small caps obviously had a big rally in August. Financials are under triple momentum right now. You know, being a cyclical growth so called sector and with small caps acting well, granted it's one month. However, we haven't seen this in a while. Which means, you know, any kind of cut, if it comes, it has to be based on balanced data. And if it's really weak data for whatever reason, on Friday, you could see overall movement in the market be even more than what's expected because then, as you guys were discussing before, you might start pricing in a little bit more of a majority cut in October as well. So I think right now it's a little bit of an exhale. It's like, let's see what happens. It's clear at this point much of the data will be more balanced in terms of supply of labor and demand for labor. And we'll probably see more of the same revisions. We all know what's going to happen there perhaps. And then ultimately on Tuesday, you'll see the revisions come out as well. So we're going to buy the dip here, Melissa, if there is one.

A (16:38)

All right. So are you. It sounds like you're bullish. Basically, at this point, there's no valuation concerns. You mentioned the breadth of leadership. It is starting to show breadth, but we are still historically narrow. That doesn't concern you.

F (16:55)

The actual concentration doesn't concern me as much because the earnings contribution of the leaders is equivalent to their market cap. We didn't see that at the peak of the last tech cycle in 99, 2000, March of 2000, the actual earnings contribution was well below one half of their actual market cap. And now it's almost neck and neck. So it doesn't really concern us because ultimately if you do further get rotation that creates a healthier market. What could happen, though, and this is where it gets important, is the actual return on an annual basis goes down relative. Relative to what we've seen over the course of the last few years and even the last decade, you get more normal returns versus the double digit 13, 14, 15 or higher. So overall, we are bullish. We call it an owl market, which is moving your head left and right 360 degrees to try to find confirmation every step of the way that the most important factor, which is profits continue to accelerate and you see revisions going up to the upside. That's what we expect.

B (17:54)

Chris, without the government jobs, is there a shot that the jobs number where you started is a bad number and we get a 50 basis point cut in September?

F (18:05)

Well, I'm going to start off by saying I'm not an economist or an arranged strategist. However, there is a shot. I don't think that that's likely given a lot of the data that we've seen, particularly in consumer spending, which is still solid. As you know, our bank of America Institute has very good data around that and we would be very surprised if you got an extremely weak number for whatever reason. We see more of a balanced number, if you will. What we what the consensus expects as well.

A (18:30)

Chris, great to see you. Thank you. Chris Heise, bank of America, Merrill lynch there's an expression don't fight the Fed.

B (18:37)

Yes.

A (18:38)

Are we in that position right now with markets at a record high? You don't want to fight the Fed in that we know that the Fed will cut rates, that we know that the changes to the makeup of the Fed would make it even more likely that those rate cuts will come and make it more likely potentially for those rate cuts to come sooner.

B (18:55)

I don't ever want to fight the Fed but but I would be concerned that if we had significant deterioration in a labor market more than we thought, the market's not priced even close to slower growth, let alone recession. So I thought Chris's comments as it relates to both Supercycle and Not just a CapEx but CapEx in the industrial sector, parts of the economy that actually lead to both better earnings but also just better spend around industrials is interesting and there's an argument for that.

A (19:25)

All right. Meantime we do have an earnings alert on Broadcom. Shares of the chip maker volatile after hours despite beating estimates and guiding to a strong Q4. Christina parts and Nevilles joins us here on set with the latest from the call. Hi Christina. Hi. Two big things from the call right now, the fact that they just said that the gross margins were down for the chip group year over year primarily due to product mix. I just scribbled that down right before coming on set. And another thing that I was I found in the 8k which hasn't been discussed on the call is this one time non cash tax provision of $4.5 billion because of a transfer of IP back to the United States due to supply realignment. He hasn't explained what that means. Tried to ask all of my colleagues, you know, what is this IP shift? So I have an unanswered statement in regards to that. But for the stock there was a run up quite a bit. Much like we saw with Nvidia stock more than doubled heading into the print. AI revenues came in at they're guiding 6.2 billion which was higher than not only the street but what buy side wanted at $6 billion. So there's a lot of strength in this report. VMware came in strong. That's their software segment. Now they had record free cash flow but yet like you said, stock is just not really rewarding investors as much. Although it's a 4%. Oh, now I can see it. Yeah, now it's jumping. It's jumping. They better get back on the call. Well, they're talking I guess to the strength too. They said broadband wireless is improving. Networking should remain. Enterprise networking should remain down though. But overall I think he's really talking up the fact that AI servers strength, chip strength is continuing. Christina, thank you Christina. Parts and novelists. And of course this comes after HP reported yesterday very strong another data point in terms of the AI story. Karen. Right, Dell, Dell was up today on the back of all that.

D (21:10)

Yes, all the. Dell was pretty disappointing. I got to say of all of them Dell was weakest. I mean this is great. It's a very good report. It's just the valuation going in was. Is expensive and remains so similar growth.

E (21:21)

To Nvidia, but it's got much better multiple. I mean you think about that, right? But we keep hearing this and we keep reading this. There was a report I think we talked about the other night that you know, Google is set on competing with Nvidia. They obviously are also creating their own TPU's, their tensor processing units and we keep hearing also about a lot of Nvidia customers that are looking to do custom silicon. So at the end of the day, you know, you look at this sort of revenue beat and you look at the guidance, it's not particularly exciting and I'm actually surprised after the run the stock had that it's still up and I wouldn't be surprised. You know, we were talking very similarly about Nvidia about a week and a week ago or something and the stock really didn't make any progress. And if you look at Taiwan Semi hasn't made any progress since its earnings, Microsoft hasn't either. So I think there's probably a leveling out the enthusiasm because the percentage of the Beats are just getting smaller.

A (22:11)

There's some comments being made on the conference call from Hock Tan, the CEO of Broadcom saying we expect growth in a semiconductor revenue to accelerate to 6.2 billion in Q4, delivering 11 consecutive quarters of growth as our customers continue to strongly invest. So that could potentially be behind that, that pop that we just saw in the after hour session up almost 4% at this point. We'll keep an eye on on the call and any headlines that may cross meantime coming up, one of the last holdouts on Apple just turned the corner. Why? The recent bear upgrade of the tech giant and what is in store for the stock plus crypto under pressure and Bitcoin treasury companies leading the pack Lower where traders see that space heading next do not go anywhere. Fast money's back in two how will.

B (22:54)

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E (23:55)

Will the job market.

B (23:56)

Bounce back from the recent weakness? Will the White House challenge the accuracy of the data numbers and analysis of the critical August Jobs report? Squawkbox tomorrow, 8:30am Eastern streaming on CNBC.

D (24:09)

Plus.

A (24:13)

Welcome back to Fast Money. Moffitt Nathanson changing its tune on Apple this morning, upgrading the tech titan to neutral from sell, bumping its price target to $225 from 139. Analysts saying the worst case scenario for the stock well off the table. But they warn its valuation is still rich and its Apple intelligence rollout has been a dud, though not a big enough dude to warrant accelerating any more at least. Of course, you know, in terms of the money it collects, research that's in play that is secured now. And now it has an agreement to find a new product.

D (24:45)

Well, one of the things they talked about was just some of the really bad things not coming to pass and that was certainly one of them. I mean it's an interesting call. Good. You know, it's 225. It's still below where it's trading now. I have not been so positive on Apple for a while for all the reasons that Dan loves to talk about. Little Mr. Ray of Sunshine there no product cycle. No I expensive all of that.

E (25:08)

But the announcements have gotten better. They have. They have not. They are literally reintroducing a phone next week that they have introduced to us the last four years and you know.

B (25:19)

I'm going to buy one. I mean look how broken this one.

E (25:21)

Yeah, you have an iPhone 10 14.

B (25:24)

14.

E (25:25)

My point is this is a high single Digit earnings grower. It's a mid single digits revenue grower. There is no upgrade cycle. If they told us they are literally doing a 1984 commercial, remember that commercial where they were just and they said Siri, you're dead. Like you're dead to us. The stock would go up like 5%, I guarantee you. Because nobody is going to be excited about a mid-2026 relaunch of Siri. With Apple intelligence built on the models that they built using a search technology they have yet to build. They've had a massive brain drain as it relates to their AI capabilities. All the folks have left. They will not do what Mark Zuckerberg at Meta just did. Throwing hundreds of millions of dollars of talent at this thing. So you tell me, are people going to run out and upgrade their phones? Unless you're Tim because you have an iPhone 14 and it's just mangled, you know what I mean?

B (26:15)

Like I'm a mangler.

E (26:17)

Listen, and one last thing about Moffitt and Nathanson, we've all known them a long time. These guys are really good at what they do. Now you can say well they have a sell on this thing but you know what I mean?

A (26:26)

Well them having a sell was, was the right call and then moving to a neutral is just getting a little bit less bearish because they are so bearish as Karen pointed out in terms of the price target.

B (26:35)

But, but think this, this removes an overhang for Apple in terms of a negotiated revenue stream that we knew. And so unlike the AI which as Dan just said, there's nothing about the phone that's, that's going to knock your socks off. So therefore we haven't priced in AI. So if we keep Apple kind of in a position also. So this, this locks Google into no restrictive but it keeps, you know, Apple's dance partners are many here. And once again my mangled iPhone 14 shows that 2.3 billion installed base means that there's a lot of manglers out there. This is the whole point. Where are you going to go? Are you really going to go buy a Samsung phone? I don't think so. Maybe, you know and I don't think you're going to go to Johnny. I've in some device that's not even a smartphone. So I just think Apple is in a great position to eventually be the place where AI served up and we haven't priced it. Most people don't buy a phone for AI anyway, they buy it for the camera. So 50 to 60% of people are buying for a better camera. It's going to have a better camera. Is the, is the air phone coming out this time or is that the next time?

E (27:33)

This time.

B (27:34)

So, so that's going to be something special, right? It's going to be a much thinner.

E (27:37)

Phone, easier for you to drop with a horrible battery. I mean, like it's not.

B (27:41)

But there's going to be changes. And I think we're different from our group. Right. There's no. You think most people are going to buy a phone for AI I don't.

E (27:48)

Think this is about North America. This is about China. Right now they're losing market share. I don't even think they're in the top five companies like Huawei, but they.

B (27:54)

Cut price for a year and a half.

A (27:56)

I mean prices, people.

E (27:58)

I'm just saying.

B (28:03)

Addresses. What about the battery? Doesn't matter.

E (28:06)

Front of terrorists.

B (28:08)

Services are 25%. They have an install base of 2.35 billion people.

E (28:14)

I think iPhones are, I think they're like 15 or 1 6.

B (28:17)

What are you going flip phone these days? What are you doing?

A (28:19)

It's got burners. Coming up. The next move in crypto is bitcoin. Treasury companies come under pressure. What's weighing on those names and where the desk see that space headed next? You're watching Fast Money LIVE on the NASDAQ markets at Times Square. Back right after this.

B (28:40)

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So the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device. Coverage not available everywhere. Learn more@att.com 5G Network will the job market bounce back from the recent weakness? Will the White House challenge the accuracy of the data numbers and analysis of the critical August jobs report? Squawk box tomorrow, 8:30am Eastern streaming on CNBC.

A (29:28)

Welcome back. We want to alert you to a special event we're hosting on December 11th, Fast Money Live trading the Holidays. You can join me and the traders here at the nasdaq. Watch the live broadcast, ask us your investing questions, share a cup of holiday cheer with everyone on the desk, plus some special guests as well. The show will be chock full of stuff, stocky, stocking stuffers the traders, best ideas for next year and so much more. So join us for this one one of a kind event. Scan the QR code on the screen. Go to CNBC events.com fastmoney for your tickets. We are decking the charts, trimming the trades, wrapping them all up for you. Tim might sport a hat as he is doing tonight.

B (30:03)

I mean it is. I'm feeling the holiday spirit right now and red looks good in September. Come trade the holidays with us folks. This is going to be really fun. This is going to be the best one yet.

A (30:13)

It's going to be great. We always get a great crowd. The fans are amaz and we've got a lot of long got repeat people.

B (30:21)

Have such a good time. They're coming back. I spoke to one today.

A (30:23)

Yeah. It is an honor for us to host you here. So please check it out, check the tickets out. Meantime, Bitcoin treasury companies falling today. Names like Bullish, Bit Mine, Immersion, Amer holdings strategy getting hit as Bitcoin hovers around $110,000 crypto coins under pressure as well. Ethereum, Solana, XRP, all lower today. Steve, you've been active.

E (30:44)

Yeah.

B (30:45)

Well if you look at, if you look at Bullish, it was an IPO probably all, all these ran up. It's nothing to do with any of the other IPO stuff where you wind up having that price priced out. Sellers come in, they liquidate on that day, Crypto sold off dramatically. So they're all getting hit from that. I don't think it's any bigger story. I think you give it a month, two months and it goes right back on the horse again.

A (31:09)

I can't look at you still have the hat. You can't take this.

E (31:15)

I say can I say the promo.

B (31:17)

Is over to take off the hat.

A (31:18)

I said serious.

B (31:20)

Do you have a hat?

E (31:21)

I think the enthusiasm around. No, I just, I just. It was a holiday thing, you know what I mean?

B (31:27)

That's what we do.

E (31:29)

I think the enthusiasm around in theory is about as silly as I've seen in a very long time. And people keep talking about the flipping happening. That sounds so 2017 stable coins.

A (31:39)

Stable coins. Come on, why?

E (31:41)

I mean just like do we need stable coins here?

B (31:44)

The foundation that all the stablecoins are.

E (31:45)

Built on if big, fine. But let's see what the uptake in stablecoins are. Let's see how sustainable these strategies are when you have the strategy. Strategy. Let's see what these treasury strategies are. And bitcoin can't get out of its own way and the only right now the and I'm know that the hate's coming. I'm not on Twitter people just bring it. I don't care. You know like the only bullish case right now for Bitcoin is a store value and it doesn't even act well as the dollar goes lower. Okay. It's really correlated to the Nasdaq so it's a long duration asset. Okay. And then Etherium. I've heard the same things about Ethereum. I heard it in 21, I heard in 17 and it's trading at the same levels but have a ball.

B (32:25)

We're going to this hat by the way.

D (32:27)

Yeah. Just to just to address your point about the only bullish store of value. I don't agree with that. I do think the idea of a Fed Fed independence being under threat is actually a bullish case for isn't it rallying?

E (32:40)

I mean I don't know if it's.

D (32:42)

Going to correlate one to but I agree so you know it's momentum and all of that and goes ebbs and flows. But I do think that fundamental case.

E (32:51)

Is important theorem is going to be a disaster.

A (32:55)

Mark the words. Mark the day. Coming up, Lululemon on the move. After reporting the details in the quarter and where one top retail analyst sees a beaten down athleisure company heading next. We're stretching into that one when Fast Money returns. Welcome back to Fast Money. Stocks jumping ahead of tomorrow's jobs report. The Dow up 350 points. The S&P 500 up 810 of a percent notching a fresh record close. And the Nasdaq climbing nearly 1%. JP Morgan hitting a fresh all time high. The bank now up nearly 27% this year. And shares the docusign jumping after hours after topping EPS and revenue estimates and hiking guidance. Another earnings alert here on Lululemon. Shares are sinking after the company beat EPS but missed revenue estimates estimates same store sales and full year guidance also coming in below expectations here with his take on the quarter. Jefferies managing director at Randy Connick. He's got an Underperform rating off $150 price target on the street. A street low in fact per factset. Randy, great to have you with us. You've gotten the story right for so long now and I'm wondering another disappointment here. What do you need to hear from this company? What do you want from this company at this point?

G (34:05)

I think what we need is we need a confession. We need a confession on the earnings guidance. They took the Numbers down. We thought they would, they just didn't take the guidance down low enough. And you know, the way this works is when a brand is soft or has no momentum in the spring season, it's pretty awful in the back to school and holiday season. So you know, while the numbers were cut there, they weren't cut enough. And I think what the company is trying to do is get the market focused on next year. And what, what they're going to have wrong is they think they're going to grow next year. We think they're going to have declining growth because of the competition. So we have numbers well below the street. And until the company confesses to their sins of earnings power much below where it is today, that's when the stock will bottom. Until then it won't.

A (34:51)

What is its biggest problem at this point, Randy? I mean is it the competition? We were just remarking here on the set, you know, we see Vuori and we see Alo everywhere we go. Is it lack of execution? Is it. I mean what is the number? If we change management team, for instance, would you get a better result?

G (35:09)

Look, I think we do need to change the management team. That's number one. Number two, it's also a product of its own success or an issue from its own success. What we've been talking about in our research is you look at the metrics here. The metrics have been amazing honestly over the last few years, until the last couple years. And what we had started to see about two years ago, we've been bare on this for two years, is that we saw a peak in the fundamentals both on sales per foot and for margins. This company does fifteen fifty dollars per foot in sales. That is four times the mall average. They do over 20% operating margins. That's well above peers. That's great until it's not. And that's where the issue lies today. And because those metrics were so good for so long, now they're starting to come down. They can actually crash. And until the numbers get crashed and the company guides those crashed, crashed expectations, the stock will just keep falling and falling further from here.

B (36:06)

Randy, it's Tim. Congrats on this call. It's been great. And therefore my appreciate my, my all my faith is on you at the next tractor pull down where, where wherever you are. So you talk about crash and also you know their capex as a percentage of sales is highest in the sector. I saw one of your competitors had a note that talked about that too. I mean at what point are they going to try so hard, hard. It's not just the numbers, it's truly that they run themselves off, off the proverbial cliff. Obviously this brand is popular, it is out there. But are they trying too hard to reverse field and maintain where they were?

G (36:41)

Look, I think the brand is relevant. I wouldn't say popular because their July sales were their worst of the quarter yet. The industry had its best sales trends, the industry in the July period. Which means that these guys are losing massive market share. As it pertains to your Capex comment, I think it's a very good one because this company is still growing. What do they use Capex for? To build new stores and they're opening stores at a double digit clip on a, on a square footage basis. You know what that does? It adds fixed cost expense to the business model which means as sales decline margin you get rent deleverage, which means margins compress. So that's really the big problem here. The death spiral of earned margins and earnings going down further because of these high fixed costs that were incurred and still incurred as the company had a great brand for the last five years. That's going to be, I think the one thing they need to do is shut the store growth. You can't do that right away. You're going to have to do that I think in 2026 because you're locked in right now for the rest of the year. Shut the stores, get back to basics, get back to being who Lululemon was. It was an athletic business and now they tried to change into the Gap and I think that's the key ratio with this, this company.

D (37:52)

Randy, it's Karen, excellent call as we all said. I mean that is excellent for say for a long time. So speaking of the Gap, we saw Athleta. That was a really weak quarter for them. This is obviously a very weak. Not this past quarter, but the guidance here for Lulu. Are we finally at this point where maybe the whole athletic thing is starting to get long in the tooth or not? You talk about, you know, there was some bright spots during the quarter. Where do you think the whole zeitgeist of athletic athleisure is?

G (38:20)

I think it's another great kind of topic to go over. Think about it this way. Very simplistically, before COVID athletic apparel was growing at a high single digit rate which was above normalized apparel growth as a general category at about 3%. During COVID athletic apparel or athleisure grew at a double digit pace. Well outperforming general apparel that, that great growth. Growth is now more of a hangover as we're digesting, digesting all those spending acceleration through Covid. And then we have that hangover for athleisure and athletic apparel. What's also happening is we're seeing some fashion shifts in the marketplace. Denim is becoming a bigger trend and also, I call it just regular clothes. Like people are not looking like they're going to the gym 24 hours a day. That's a big problem for someone like Lulu. That's dependent on that athletic look for years to drive their growth.

A (39:15)

Thank God. Really. I mean, leggings everywhere, there's got to be a limit. Randy. Thank you, Randy Connick. Be sure to catch Lululemon CEO Calvin McDonald exclusively on Squalcom the Street tomorrow. That's 10:00am Eastern right here on CNBC. Coming up, grilled on the Hill, RFK Jr. Under the microscope for his renewed attacks on the CDC. All the headlines and the potential impact on the problem pharma and health care space when FAST MONEY returns. Welcome back to fast money. HHS Secretary Robert F. Kennedy, Jr. Getting grilled by senators on Capitol Hill today. The hearing coming amid controversial new restrictions on Covid vaccines, plus several high profile departures from the CDC in recent days. Angelica Peoples joins us with all the key takeaways here. Angelica? Hey, Melissa. Well, Kennedy faced three hours of questioning and much of that focus was on vaccines and that shakeup at the cdc. Democrats pressed Kennedy on the changes that he's made to vaccine policies since taking over at HHS as HHS secretary in February, like overhauling that panel that advises the CDC on vaccines. A few Republicans, like Senator Bill Cassidy, did express their concerns. But on the whole, the secretary seemed much more defiant in his position around vaccines than he did during his confirmation hearing in front of this committee when he tried to strike a more conciliatory tone. And on the CDC drama, Kennedy denied former director Susan Minarez's claim that Kennedy asked her to pre approve the recommendations of that overhauled vaccine advisory committee.

B (40:51)

I told her that she had to.

C (40:52)

Resign because I asked her, are you a trustworthy person?

B (40:56)

And she said no. If you had an employee who told you they weren't trustworthy, would you ask them to resign?

E (41:06)

Senator, are you telling us that the.

F (41:09)

Former head of CDC went to you?

E (41:11)

You asked her, are you a trustworthy person?

F (41:14)

And she said, no, I am not a trustworthy person.

B (41:17)

She didn't say no, I'm not a trustworthy person. She said no.

A (41:23)

Now Manaros lawyer is denying Kennedy's claims, but that was just one example of a pretty contentious day that we saw today. Mel, Angelica, thank you. Angelica Peebles. I mean obviously we're talking about many bodies that fall within the realm of hhs. I don't want to say in shambles, but chaos, there is some chaos involved here and you got to wonder what kind of impact that has on companies.

B (41:47)

Vaccine makers, biotech, pharma, everything. And I think that the market's going to probably shoot first and then see what, what clears after that and see what really takes. In effect he could put enact certain policies or ask for certain policies, but until we see them, I don't know if you could really trade this well for the long term. So that's why people are sitting there on the sidelines.

A (42:10)

Coming up to Mag7 names diverging and the chartmaster is making moves. What he sees in the technical that's next for Fast Money into welcome back to Fast Money. A few weeks ago the chartmaster said Google parent Alphabet was about to break out and it's up more than 13% since that call thanks to a big antitrust win earlier this week. So what to do now? The Chartmaster is back with another big call on big tech and the answer to that very question. Carter.

F (42:45)

Hi. Well at least my thinking here is that obviously one stock having broken out and that's the issue before we get to the charts for so many stocks. Most stocks having sold off in the tariff swoon have recovered a lot of the losses if not gone on to make new highs as the market has and of course Google just now breaking out but something like Amazon has not so so here for instance is a chart of what Google did. We know it drops about 30% during the tariff swoon, recovers to that level and then bang right a news related breakout. The gap up. Now take a look by contra sanction at Amazon. Amazon really is a laggard and that is either a problem or an opportunity. I think it's the latter. It's an opportunity. So final chart of this particular effort. Those arrows are a judgment, right? Someone else say no it's poor relative strength is not going to make the new high but I think that it does. And so this would be just another one to join the general move above the pre tariff sell off high. Famously of course Apple is not anywhere close but every day another one seems to come to life and I think Amazon is one that's poised to do just that.

A (44:00)

Mm. And this is a relative call. So does Google head lower? It doesn't necessarily head lower. What do you make of that chart?

B (44:08)

Yeah.

F (44:09)

So the note to clients was, you know, to harvest the gains in Google and to deploy the capital to Amazon. In principle that would be controversial because you want to favor a move, momentum, a breakout and so there's nothing wrong with Google and I think Google will indeed go higher. But which is the better trade? Which is the better, more immediate opportunity? I think that was the point of the effort and so I would harvest some or all of the Google profits and redeploy Amazon.

A (44:36)

Thank you Carter Braxton. Worth of worth charting with a self would you rather which I Dan now Google.

E (44:43)

Google was an epic call by him. I mean you could have looked at those lines and said a textbook double top. The one thing about Amazon is their guidance stunk for Q2. Their margins are contracting with us. AWS growth lagged like let's say GCP and Azure. So fundamentally it's a little dicey.

A (45:01)

Up next, final trades. Another reminder, Fast Money Live is coming back. A special trading the Holidays live event happening right here at the NASDAQ on December 11th. Scan the QR code on your screen or head to cnbc.com fast money to get your tickets. New York during the holidays and a front row seat to Fast Money Live. We are trading 2026 in December, so check it out. Final trade time. Tim.

B (45:29)

Yeah, I was trading T. Rowe Price today on this news that Goldman has taken kind of a strategic interest in buying the underlying stock and also I think there's something to do there.

A (45:38)

Karen. Yes.

D (45:39)

So my niece Dorothy. Dorothy and Kyle had a little baby. I think we have. Congratulations. And for that little baby, Lulu. Stay away from. Stay away.

E (45:50)

And yeah, weak jobs number tomorrow. If that happens, I think you sell the home builders may be counterintuitive, but I think they're priced in a lot of customers.

B (45:59)

Steve, Lockheed Martin like the chart.

A (46:01)

All right. And a special hello to Esther, 94 year old who trades the markets watches Fast 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, 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.

B (46:49)

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F (46:58)

I need a coffee.

B (47:00)

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