← CNBC's "Fast Money"
CNBC's "Fast Money"
Financials Hit Hard In Sell-Off… And Tesla’s Reputation At Risk 3/6/25
00:43:52
Trade War concerns sending stocks plunging, as the Nasdaq enters correction territory. But it wasn’t just Tech getting wrecked. How the financials are faring, and how some of the biggest banks are getting hit the hardest. And Global backlash over Elon Musk taking a toll on Tesla. Why one leadership expert says a CEO split could push the EV maker back in the right direction. Fast Money Disclaimer
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- [00:00]
Sponsor Voice
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Melissa Lee
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Melissa Lee
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- [00:32]
Tim Seymour
Quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com creditcard Based on the February 2024 NEL.
- [01:02]
Melissa Lee
Life in the NASDAQ Marketsite in the heart of New York City is Times Square. This is fast money. Here's what's on tap tonight. Stocks in sell off mode. The Nasdaq back in correction territory as more uncertainty over tariffs takes hold. How much pain is left to come? And how can you protect yourself from this pullback? And Tesla Trouble? Shares the EV make are down more than 10% just this week. The CEO Elon Musk too wrapped up in Doge to give his company the attention it needs. We'll debate that. All that plus Broadcom on the move after earnings. A look at the state of the consumer ahead of the jobs report tomorrow. And Netflix gets chilled. Why the streamer finally got swept up in the market rout. I'm Melissa Lee coming to you live from studio. Be at the Nasdaq. On the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan and Guy Adami. We start off with the washout on Wall Street. Stocks falling again today as trade war fears and more back and forth on tariffs hit investors hard. The Dow nearly erasing all of yesterday's rebound, down more than 400 points. The S&P 500 shedding almost 2% now down a percent since the election. The Nasdaq dropped more than 3% at its lows, closing at its worst level since early October. The tech heavy index now in correction territory, down more than 10% from its December highs. Consumer discretionary tech and communication services seeing the biggest sector losses today. And in terms of specific stocks recent high flyers deep in the red today, Palantir Vistra and Constellation Energy, the biggest losers. Small caps also crushed the Russell, pacing for a sixth straight week of losses, its longest weekly losing streak since 2018. All this as investors grapple with the latest headlines on tariffs. And there were a lot of them today. Megan Cassell has got all the details on what we heard from the White House. Megan?
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Megan Cassella
Melissa, we got the official details on that tariff relief that we had been waiting for, but it was not nearly the extent of relief that markets had been hoping for or even expecting. President Trump signed that executive order officially amending the Canadian and Mexican tariffs. And what it said was that all goods that are USMCA compliant or that abide by the rules of that North American trade pact are exempt. But a White House official told me that that's only about half of Mexican goods and only about one third of Canadian goods that will see that tariff relief that qualify for that tariff relief. Everything else will still continue to see those tariffs of 25% on most goods, 10% if it's a Canadian energy product. The president also made clear when talking with reporters that this will Only last until April 2, until those reciprocal tariffs kick in and that this was only a one time short term adjustment. Take a listen.
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Karen Feinerman
It's just a modification short term because.
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Megan Cassella
I didn't want to hurt the American.
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Melissa Lee
It would have hurt the American car.
- [03:39]
Megan Cassella
Companies if I did that.
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Melissa Lee
Would you consider the same sort of.
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Tim Seymour
Exemption or pause for the auto tariffs you're talking about next month? We're not looking at that now.
- [03:48]
Melissa Lee
Now. We're not looking at that now.
- [03:51]
Megan Cassella
He also made clear there that there would be no exemptions to those steel and aluminum tariffs that take effect next week, nor would there be any exemptions to the reciprocal tariffs once we see those starting April 2nd. So a lot more to come here. And Melissa, just in the last few minutes, we're also starting to hear from the Canadians. They do say that they are keeping their retaliation in place that took effect this week on about 20 billion in goods. They are going to postpone the retaliation on about $100 billion worth of goods that now won't take effect also until April 2nd. So a little bit of relief both from the US and the Canadian side, but overall still a lot of tariffs and a lot of wait and see.
- [04:27]
Melissa Lee
Melissa, Megan, thank you. Megan Casella at the White House today. You'd have thought that that little bit of relief would have given the markets a little bit of relief. We didn't really see that today.
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Dan Nathan
Saw it yesterday, I mean, or saw when you saw it or two days ago in the form of General Motors. And you saw that bounce when they rolled it back to April, I guess. But you know, diminishing marginal returns. And I do think they're trying to sort of walk this dance between making sure the market hangs in there and talking tough on tariffs. And that's a difficult dance or difficult tightrope to navigate, but that's the one they're trying to do. With that said, you know, the October low October 31st I think was 5700ish and we're right there. Critical support levels, a lot of technical damage being done in the meantime. And again, a Vixit basically 24 and change for a prolonged period of time is something we've been talking about. VIX is going to stay elevated and I think that's why you're going to continue to see these wild swings.
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Melissa Lee
We were like 28 on the Vix December 18. We were at 40ish back over the summer and we had that huge pullback.
- [05:24]
Tim Seymour
Yeah. And I think all of us agree when you see that sort of spike in the vix, it's probably getting near a time where the sell off is getting a bit overdone and we see bounces here. I think the volatility that we've seen in this range that guy just talked about between like 5850 and 5700 is. It's a tough level here, just technically. Just. I'll just say this though, as the silver lining guy on the desk here.
- [05:43]
Karen Feinerman
Yeah, Everybody knows that.
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Tim Seymour
Just think of the hardest hit names in this sell off. I mean they're getting a little oversold. They're getting today felt very panicky, let's be very clear. But the S and P is only down two and a half percent. And so when you think about the internals of the broad market, that's probably a pretty good thing. You're going to take a lot of the froth out, you're going to get valuations back to levels where we think they're kind of appropriate. I know there was a lot of talk just two weeks ago, the S&P trading 24 times four forward earnings. A lot of that is front end loaded to some of those biggest names. So again, some of the damage that's being done in the growthiest sort of names. I actually think it's pretty decent setup. If you're thinking about the S and P that's now off six and a half percent from those recent highs.
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Guy Adami
So I'm in the difficult position of agreeing with Dan Just the ray of sunshine here. I mean, you know, the VIX was up close up almost 3, so just under 25. It's not in the panic. I don't agree, super panicky. But it's definitely, you know, as I said, things trading down in integers at a time. I find that interesting. I did a little bit of buying today. I covered some KRE that I was short against the long money centers, but it didn't do a lot else. But I do think that, you know, the names that were super supercharged are just getting annihilated. But still it doesn't take them to reasonable valuations. Right. So I think there's probably some room there, but it's not a monolith. There are things that are, I think attractive. I actually think, you know, we'll get to later, but discretionary. Some of the retailers I think have really gotten.
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Karen Feinerman
It's the velocity of the move, as we always point out, is really probably where we are. We haven't seen these types of moves down really. These feel like, you know, March of 2020 moves or at least that era. And that, that's part of this move. I mean you've got a seven day move in the 7% move lower in the S&P in 14 days. And we've been chronicling even the up days. I mean these have been intraday reversals. The volatility that's attached to it I think is emblematic of two things. One is that we've had such, such a voracious appetite for four risk assets. And we've seen that, we've seen the pullback. Especially look at, look at levered three times levered ETFs and crazy call option activity. I mean this stuff, I mean they're literally vanishing three times long ETFs. They do vanish before your very eyes. And that's, that's part of what we're seeing, I think the NASDAQ correction, which is really now officially just about there. It's part of it, but it's really, it's that Mag 7 correction that's a little over 16% from the middle of December. And that's part of it. And as we've said for a long time, when you see the real leadership, which are semis, which are now down 24% from their highs and really haven't made those new highs since July of last summer, that that's really what it comes down to. It's interesting to see some of the higher quality names that are not really mag but their second tier they're even beyond Dan's straight eight. What is it?
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Tim Seymour
The faithfully.
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Karen Feinerman
The fateful eight. The Fateful eight. But I mean Nvidia we're going to talk about later in the show. I mean this was, this was seemingly a bulletproof company that was so far ahead of its, of its peers and was expensive to itself, but not really that expensive. So lots of uncertainty on policy. Reworking the global political order leaves people, I think, in a place where they can still. I think you can pause even more.
- [08:49]
Dan Nathan
You know, Tim has talked about the potential for a growth scare. Well, it's manifesting itself in the IWM. I mean, put up a chart. This was 247something a few months ago, flirting with 200 now. And that's been breaking down at a pretty meaningful way over the last couple of weeks. And one would think if rates were going lower would be supportive. But rates are going lower I think because there is a slowdown. So it's be careful what you wish for scenario. That's something you got to watch as well.
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Tim Seymour
Yeah. So we've been talking about this. You just mentioned in video. When you think about what's the AI supply chain, Nvidia obviously was at the core of this, the picks and shovels. But we also had memory as it relates to Micron. We had competitors like supposedly amd. We had the server makers like Supermicro and Dell. So think about the data centers, the hyperscalers. We haven't seen an uptick in many of those sorts of names that I talked about before we get to the hyperscalers in a very, very long time. So once the hyperscalers joined the party to the downside, once we saw in video join the party, I think it's down like 30% or something like that. We've been talking about that. I mean the fact that people thought that these stocks couldn't get cut in half and I don't mean Microsoft or Google or anything like that, but, but in Nvidia and then look at how it broadened out a little bit. Applovin told a great generative AI story. Palantir was telling a great. They became meme stocks. These became 100 $200 billion meme stocks. Applovin has been cut in half in just a few weeks. Think about that. Okay, Palantir is down 35. It could easily be down 50% or something like that. So if you don't think that Microsoft, Google, some of these other names in the faithful eight, Tim could catch up and be down 30% then you're not paying attention because that happened in 2020.
- [10:16]
Melissa Lee
Mr. Silver lining I was just going.
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Karen Feinerman
To say.
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Melissa Lee
But silver lining may be that maybe they're, they're more fairly valued now and maybe it is worth buying an app. Lovin cut in half.
- [10:28]
Tim Seymour
Well let's be honest, I mean Nvidia, if that thing got cut in half I think it'd be the steal of the century because then it's really up to them to just start. The expectations will be down so much. Right. And then the beats that they need is not going to take much to get that stock going again.
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Guy Adami
I'd rather way rather have a Google or Metta over an app love. And down half for sure. Not even close.
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Melissa Lee
All right, financials, we spoke about this before. Getting hit especially hard this week. The sector down another 2% today on pace for its worst week in two years. The KB Bank ETF heading for its worst week since August. And take a look at one of the biggest laggards. Bank of America down more than 10% since Monday now at its lowest level since October. So it doesn't have a single penny of post election optimism baked into it. Well whether it's from deregulation or handcuffs being off whatever you want to call it.
- [11:16]
Dan Nathan
Yeah, well they have their own issues. They obviously were in the crosshairs of this new administration for a period of time. They probably still are. I think they have a, you know, to maturity holdings in terms of their risk they have with rates going higher when interest rates 10 year yields were 5% I think that $117 billion unrealized loss. So they have their own issues without question. I think there are a lot better banks than bank of America but when you see a move of that magnitude you have to take notice.
- [11:40]
Guy Adami
So I don't still love bank of America yet but it is sort of getting interesting. They do have that big problem. The guy talked about being way too invested in low yielding assets that are maturing 10 years from now. So that's bad. I also think they do have a very big credit card portfolio that may be weighing on some of it. They do have an outstanding deposit franchise though and I think that's where something and their banking business is actually. I know we're a little disappointed the slowdown banking but they've actually sort of worked their way up the ranks. So yeah, I got to look at it.
- [12:13]
Melissa Lee
Is a credit card portfolio any worse though than the credit card portfolio at Citi or JP Morgan in terms of quality?
- [12:19]
Guy Adami
I think they're their charge off rates I think were pretty similar. Yeah, yeah, yeah.
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Karen Feinerman
But I do think that in bank of America you are sniffing out a little bit of the consumer. I think you're, you're and you're also sniffing out, let's be clear. I mean there is a hierarchy in terms of quality in the money center banks and bank of America hasn't been it, it's no one has been at JP Morgan's level then it's really been Citi and Bank of America fighting out Citi I think for the last year and a half is vying for at least the more improving governance story. And actually Wells Fargo is probably stole both of their thunders in terms of at least getting back a little bit under the graces, getting some, some, you know, set out, let out of the penalty box in terms of some of their, their asset management stuff.
- [12:58]
Melissa Lee
Yeah.
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Tim Seymour
Away from the money centers I think Goldman and Morgan are pretty interesting. You know they've had now a bunch of IPOs, at least S1s that are being filed or thought to be in the very market. Why don't they, I mean so you get pushed out because of market conditions, as they say. I think this core we've one is really interesting. We talked about it here. 77% of their revenue, it's a data center company comes from two companies, Microsoft at 62% and there's an article in the FTSE today that they're canceling some of these data center leases. That's Microsoft. That thing's not coming out, not in this environment with generative AI and the broad market. So to me I think that the IPO calendar not getting going and maybe M and A that hasn't existed is going to weigh on Morgan and Goldman in the near term.
- [13:38]
Melissa Lee
We've got a news alert here on Walgreens finally reaching a deal to be taken private. Let's get to Seema Modi for the details. Hey Sima.
- [13:46]
Guy Adami
Melissa.
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Melissa Lee
The Wall Street Journal reporting that Walgreens has sealed a $10 billion take private deal with Sycamore Partners. That's the private equity firm which if approved would be one of the biggest.
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Megan Cassella
Leverage buyouts in the past decades.
- [13:57]
Melissa Lee
This is Walgreens, the pharmacy chain that.
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Megan Cassella
Has been challenged in recent years. Chief executive Tim Wentworth is quoted by.
- [14:03]
Melissa Lee
The Wall Street Journal saying going private is going to let us be more.
- [14:07]
Megan Cassella
Focused, more nimble, more long term in.
- [14:09]
Melissa Lee
Our decision making in the context of.
- [14:11]
Megan Cassella
The challenges that we continue to face. Stock up here in after hours.
- [14:15]
Sponsor Voice
Melissa.
- [14:16]
Melissa Lee
All right, Seema, thank you. Sima Modi. Well beyond the struggling markets we are also seeing real increases in auto and mortgage delinquencies. Are these fresh, worrying signs that the consumer slowdown is picking up steam? Let's welcome to the set. Michelle Meyer, MasterCard Economic Institute's chief economist. Michelle, welcome. Great to see you in person here.
- [14:34]
Sponsor Voice
Great to be here. Thanks for having me.
- [14:35]
Melissa Lee
So we're hearing so much, I mean, the sentiment data softening and we're hearing, you know, grousing from the C suite about tariffs and the impact on consumers. Are you seeing that in the data?
- [14:45]
Sponsor Voice
So you're not yet. And I think that makes sense because the first to react to headlines are going to be the soft data. It's the surveys which is showing up. The University of Michigan consumer sentiment survey showed an increase in inflation expectations, even longer run inflation expectations, which is meaningful. So consumers are thinking about what tariffs might mean for the future and how persistent it might be for how they absorb prices. But they're not spending very differently yet, at least not in a discernible way. And I think a lot of that is because the fundamentals of the economy are still sound at the moment. When you think about the labor market, about wage creation and you think about the fact that it's been a very positive wealth effect over the last few years and a lot of that has buoyed the consumer, how do you think.
- [15:27]
Melissa Lee
About how the consumer will spend once the tariffs go into effect in terms of a shift maybe towards grocery and away from discretionary? I don't know if you, you know, use 2018 as a guide here at all.
- [15:39]
Sponsor Voice
Yeah, well, I think the, what we've learned about the consumer in the last few years is that the consumer has been very nimble. Right. This is a consumer who is very aware of where they can find value and how they want to deploy their purchasing power so they get the best out of their dollars. So you could imagine an environment where the categories that have seen the biggest price increases because of that pass through of tariffs, maybe they shy away from purchasing those and move towards those that have more value, lower prices. You don't see the tariff impact. So you could see a little bit of a goods experience story play out. Where the services economy that doesn't have the direct hit from tariffs, experiences like travel, restaurants, leisure, maybe there's some acceleration in spending there where some of the durable goods where the tariff impact could be more meaningful and quick consumers shy away. We'll see, we'll see how the consumer response.
- [16:33]
Guy Adami
So as a sort of segue from consumer spending to worrying if the consumer is really starting to get hurt. What's the most important piece of data that you look at? Whether it's 30 day delinquencies or something totally different, that is a good sort of indicator of wow, the consumer is really feeling pinched and we got maybe a credit issue here.
- [16:53]
Sponsor Voice
So there's the balance sheet issue which you're speaking of, but then there's also the drivers of sports spending which is the labor market. And to me both of those matter. But I like to really focus on the labor market as an indicator of what's to come for the consumer. And I think that was really important in the last several years when people have been looking for this big turn in the consumer. It's coming, it's coming. How can the consumer continue to spend? Well, they can spend because the labor market is supportive. So tomorrow's jobs report will be very important. It's still early in the process, right? In the sense that we're probably not going to see if these headlines are mattering just yet. But monitoring all the different labor market measures, initial jobless claims, the Jolt survey, the Challenger survey and of course that monthly jobs report.
- [17:37]
Dan Nathan
Is there an unemployment rate where things start to flash and you know, because listen, it's historic in terms of how well the job market's been but you know quickly how things can change. So speak to the level that gets concerning.
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Sponsor Voice
So I think it's less about the level and it's as you said, the change, it's the rate of change once you see the unemployment rate trend higher and it's consistent and it's indicative of people losing their job and staying out of work. So looking at things like how long the duration of unemployment, the micro data within the jobs report, then you start to worry because then you realize that there's not that degree of healthy churn in the workforce that would be supportive of the consumer going forward. But we're not seeing that.
- [18:19]
Melissa Lee
Right.
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Sponsor Voice
You have a 4% unemployment rate. That is a low unemployment rate.
- [18:22]
Karen Feinerman
But how about in the discretionary part then of the spend and really in consumer discretionary. There are parts of discretionary that I frankly thought was were going to fall out of bed in the middle part of last year. And I looked at also some of those places, I thought there was too much pull forward and post Covid pent up, you know, voracious buying. Actually I've used voracious twice now.
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Melissa Lee
I'm sorry, it's a great word.
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Karen Feinerman
Well, it's not three times it's done. But ultimately where are we in your concerns around that type of spend. And it seems like we punished a lot of those names. We talked about Lulu, we talked about Nike, some of those might be competitive. Are you worried about that spot of spending?
- [18:58]
Sponsor Voice
Well, look, if the consumer were to fall under stress, typically what you see is a shift into essentials. They have to eat, they have to pay their bills, they have to get gas to drive. So you do tend to see a shift away from discretionary, into necessities, into essentials. So that would be indicative of, again, a sign of consumer stress. I think what's happened over the last few years, when you think about the shifting consumer basket, it's been about choice, not necessarily about economics for most consumers out there, in the sense of what is it where they find the most value, what are they prioritizing? And initially after the pandemic, of course, it was appliances, it was goods, it was all things tangible. Once the economy reopened and then continued, you saw this big move to experience economy that continued to have legs. The strength in the dollar was part of it. Right. In the sense that you can travel abroad and your dollar goes further. But to me, it's been a, it's been a consumer that has made these very discreet choices where they see value and where they want to use their purchasing power, not necessarily based off of the economics.
- [20:03]
Melissa Lee
Michelle, great to see you. Hope you come back soon.
- [20:05]
Sponsor Voice
Of course. Thank you.
- [20:06]
Melissa Lee
MasterCard, what do you think of the consumer here?
- [20:08]
Tim Seymour
Well, let's just be clear. Over the last four months, we've seen an about face in a lot of policies as relates to, you know, the consumers. And if you think about the austerity that we're kind of in right now, every day we're waking up to a headline where government workers are being, you know, know, fired. And we're also worried about the prices of things going higher. Right. And so when you think about that setup and then you think about some of this data that has been getting softer, that's why tomorrow's number is so important. You look at that GDP now, the speed in which that thing turned, and I know we're not going to come in with a minus 2% print, but the speed in which it did, it's not too different than what you're talking about, the velocity in which the unemployment rate could go up. And so we're going to get a better sense for that. If you start seeing headlines like that you reserve or reverse some of this wealth effect that we've seen in the stock market, that will weigh on consumer sentiment.
- [20:54]
Melissa Lee
The federal layoffs will start hitting the numbers in the next few weeks and that's when we're going to see some headlines there.
- [20:59]
Karen Feinerman
I think tomorrow's number is going to be fine. I think the number to watch is certainly going to be that March number. And back to what Michelle said, even though she's not here anymore. There are the things around travel. I mean look at the pullback in some of the hotel stocks. Look at the pullback in some of the airlines. I do think some of that is both the cyclicality of that business and also just people are doing that less.
- [21:17]
Melissa Lee
Yeah. I thought it was interesting the whole like shift willing to spend on services still because they won't be impacted by tariffs. But paring back purchases in categories that will feel tariffs.
- [21:27]
Guy Adami
Right. Well, I would have thought they could have maybe hoarded a little bit. I don't know. That's for the, for the, for the Wal Marts of the world to do. But I think, I think she's, I mean the is what I just amazed probably at the trove of, you know, treasure of data that she can look at that jobs is really the underpinning. You're employed, you feel like you can spend.
- [21:48]
Melissa Lee
Coming up, some key names on the move after hours, Broadcom, Costco and Gap all reporting results. Details in the numbers from those quarters next. Plus Netflix dropping nearly 9% in today's sellout. How our traders are handling the drop in the streaming giant when Fast Money returns back into.
- [22:08]
Michelle Meyer
For 140 years, MultiCare has been in Washington prioritizing long term.
- [22:13]
Melissa Lee
Solutions, partnering with local communities and expanding access to care. Together we're building a healthier future.
- [22:21]
Tim Seymour
Learn more@mycare.org Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report. Friday night on an all new Dateline.
- [22:55]
Karen Feinerman
You're the most hated mom in America.
- [22:57]
Tim Seymour
I heard that Lori Valo Debel, also known as Mommy Doomsday.
- [23:02]
Karen Feinerman
Did you watch your children die?
- [23:04]
Tim Seymour
The exclusive.
- [23:07]
Megan Cassella
You've heard a lot of stuff, Keith. What I tell you will be the truth.
- [23:10]
Tim Seymour
An all new Dateline Friday night at 98 Central only on NBC.
- [23:20]
Melissa Lee
Welcome back to Fast Money and Earnings Alert on Broadcom. The Chipmaker stock jumping after hours on bottom and top line beats Broadcom also giving better than expected guidance. A conference call underway. CNBC's Christina Parsonnevolos is here on set with all the latest.
- [23:32]
Megan Cassella
Christina, much of the beat or the January quarter was due to software revenues are up 15% sequentially. That was according to the CEO on the call, the acquisition of VMware software infrastructure firm really helping drive that category. As for hardware though, Broadcom CEO highlighting on the call just now, still ongoing, that hyperscaler spending continues to drive AI growth or in specifically in semiconductor revenue and that he anticipates momentum to actually continue into the second quarter. So there's that demand word. The company manufactures custom chips for major tech players including Google, Metta and ByteDance, which is TikTok's parent company with two additional hyperscalers joining the mix since last quarter. So that's what he just said on the call. He didn't say the names, but it's assumed to be OpenAI as well as Apple. He didn't specifically name them. And this is expanding the client base and helping AI revenues climb an impressive 77% year over year in Q1 and pushing the Q2 revenue outlook. As you mentioned, higher sell side analysts had previously set lower projections for the quarter, assuming that Broadcom's ramp up of Google custom chips would only materialize in the second half. But we're seeing that growth accelerate faster than anticipated right now.
- [24:38]
Tim Seymour
All right, there's nobody better who covers this space.
- [24:40]
Dan Nathan
I agree.
- [24:40]
Karen Feinerman
All right. Nobody does it.
- [24:41]
Tim Seymour
You've been all over all of these names for Nvidia was the big one. Right. All of this speaks to and I know I was doing silver linings as it relates to Nvidia.
- [24:50]
Melissa Lee
Scrap that for Playbook.
- [24:51]
Tim Seymour
It's not good for Nvidia. Right. If all of these hyperscalers are looking to kind of second source or, or get more custom. Is that what your takeaway is?
- [24:58]
Megan Cassella
Exactly. And Jensen Huang was asked that a while a few weeks ago specifically about the ASIC market. And his argument was that you need the GPU because the ASIC market, these custom chips focus only on one particular task. That is the difference between these chips and something like what a GPU can offer where, you know, there's a lot of computational, I guess, aspects going on at the exact same time. So that's his major argument. There's no doubt though look at Broadcom and if you look at the valuations too, you just look at the stock. I think that this is now a name that's arguing there's further growth to come from not only hardware but software as well. Networking non AI plays is there is.
- [25:37]
Melissa Lee
This seen as the neck a next leg before it was seen as a competitor to Nvidia, but to the point of customization and we're moving away from from just the GPUs and you need the more custom chips that this is like the next leg play in AI in terms of hardware.
- [25:53]
Megan Cassella
It would be the next portable play in hardware right after you do need the GPUs. That's the foundation for all of it. But I think going forward to your point, you won't need the anticipation is you won't need to go with that annual cadence that India is offering.
- [26:08]
Melissa Lee
Like once you build out there's only so many more.
- [26:10]
Megan Cassella
Exactly. So then that's where these individual play custom chips that you can make in house come into play, which is what we know Google, Apple are all doing with their own chips.
- [26:20]
Dan Nathan
You know, a week ago Christina talked to the live audience in one of the commercial breaks and that was fantastic, by the way. That's a tease. We have something to tell folks.
- [26:27]
Melissa Lee
It's a tease for the tease later.
- [26:28]
Dan Nathan
On in the show. And then in terms of Broadcom, I mean that's a name we collectively like. I think December 15th or so when they reported the move was extraordinary. But they back and filled the entire move from 250 down to 180 stopped at the moving average. 50% retracement is 2152 15. That's where it goes. I think that's where you take profits. Then we'll have another conversation.
- [26:49]
Melissa Lee
Christina, great to see you. Thank you. Thank you Christina, Bart's novelist. Coming up, more after hours action to bring you Costco, Gap and HP on the move after reporting the details from the quarters Next in Tesla shares now down nearly 40% since the inauguration. With global backlash over Elon Musk hitting the EV maker, is it time for the CEO to refocus what that would mean for the stock ahead? You're watching Fast Money live from the NASDAQ markets at Times Square. Stay tuned for a special announcement after the break.
- [27:20]
Michelle Meyer
For 140 years MultiCare has been in Washington prioritizing long term solutions, partnering with.
- [27:27]
Courtney Reagan
Local communities and expanding access to care.
- [27:31]
Melissa Lee
Together we're building a healthier future.
- [27:33]
Tim Seymour
Learn more@mycare.org Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report June 5 CNBC's Fast Money Live returns and you can get in on the action.
- [28:13]
Melissa Lee
It is a very special night here on Fast Money.
- [28:16]
Tim Seymour
Join Melissa Lee and the team of traders live and on air.
- [28:20]
Melissa Lee
18 years this has been on my bucket list.
- [28:22]
Michelle Meyer
It was awesome.
- [28:22]
Tim Seymour
The energy in that room was great. An exclusive in person experience at the iconic NASDAQ market site in New York City. Get your tickets now@cnbc events.com fast money.
- [28:38]
Melissa Lee
Well, last week's Fast Money Live event was so popular, we're going to do it again. You just heard the day. June 5th, right here at the NASDAQ market site in New York City. And a reminder what the day is all about. You watch a show at the nasdaq, maybe get on the air with your question. Then you'll be part of a Q and a with the traders. Plus one on one time with all of us at the cocktail hour. Last week we took lots of selfies, we signed lots of autographs, we answered lots of serious questions. Maybe not so serious questions to everyone left. Also with a six month subscription to CNBC Pro and a great Fast Money Live gift. Apparently there's a black market for these gifts now. So hot.
- [29:15]
Dan Nathan
We had so much fun collectively and it's great to meet everybody and you want to talk about. So I don't know if they can get a close up. We have these crazy crystal glasses that are just exquisite. But then I want to show you what else we have here. If we can get, we have little pictures. Oh, I don't know if you can see.
- [29:31]
Melissa Lee
They're like hold them up.
- [29:33]
Karen Feinerman
Take one out. We grab Karen there. Tim and grab Karen.
- [29:36]
Melissa Lee
If you don't like one of us, look at that.
- [29:38]
Dan Nathan
You could throw it away. And though Mel Fast Money playing cards.
- [29:44]
Melissa Lee
I mean this is Trader Cards. Yep.
- [29:46]
Dan Nathan
Well, trader cards playing cards. I mean Tim's card is like an Onus Wagner original. That's how much it's going for. So we had a ball. Everybody had fun. We're looking Forward to the June 7 event.
- [29:58]
Melissa Lee
It was fun to meet all the people who make the show special.
- [30:02]
Dan Nathan
June 5, people who are watching Sandy's in my ear yelling at me. Fifth.
- [30:06]
Melissa Lee
All right. June 5th, June 5th. All right. So to join the party, go to cnbc events.com fastmoney Tickets are limited, so please sign up right now. Coming up, Tesla in a tailspin. The EV maker shedding about $500 billion in market cap since President Trump took office. So is it time for CEO Elon Musk to turn his attention back to his company? Or should he hand over the reins to someone else? We'll debate that when Fast Money returns.
- [30:34]
Tim Seymour
Missed a moment of fast? Catch us anytime on the Go follow the Fast Money podcast. We're back right after this.
- [30:52]
Melissa Lee
Welcome back to Fast Money. Stocks resuming their decline after yesterday's reprieve. The Dow falling more than 400 points, the S&P down nearly 2% in the Nasdaq leading the losses down more than 2 1/2 percent. Shares of Caesars lower today as well. The company now on a 13 day losing streak, its longest on one record. The stock is down more than 27% in that time and some more after hours moves. We are watching shares of Johnson and Johnson, the company discontinuing phase three studies of a depression drug because of weak efficacy. On the earnings front, Costco missing EPS estimates but beating revenue expectations. And Hewlett Packard Enterprise lower after reporting even as earnings came in in line with estimates and revenues beat. The company also announcing plans to lay off about 2,500 workers in the next 12 to 18 months. And gap stock popping after a big beat on earnings. CNC's Courtney Reagan's got the latest from the conference call court.
- [31:40]
Courtney Reagan
Hi there Melissa. So captures after hours really doing an about face. From what we've seen the last three months, the retailer did be consensus really across the board, most notably I'd say for earnings and then comparable sales guidance conservative, which is on par with most retailers at this point. So total comps grew 3%. The street expected just 1% growth. The namesake Gap brand that was the most impressive, gaining 7%. Banana Republic posting a surprise gain too. I spoke briefly with CEO Richard Dixon and CFO Katrina O'Connell and like other retailers, O'Connell said the unseasonably cold February did cause the quarter to get off to a bit of a slow start. But as the weather normalized, Gap was pleased with what they've started to see in the business and that quarter to date trends are embedded in this outlook that we just got so good. Dixon says that gap sources 10% of its product from China and then less than 1% for Mexico and Canada combined. So the impact of 20% tariffs on China and 25% on Mexico and Canada is also in this guidance. While he wouldn't detail exactly if prices will increase. He did say, quote, our goal ultimately is to minimize the impact to the consumer no matter what the cost inputs are across the business. And that call is still ongoing. Melissa, they've yet to get to the Q and A. It might have just started here. So maybe we'll get some more detail then back over to you.
- [32:51]
Melissa Lee
Karen, you got a question?
- [32:53]
Guy Adami
Yeah. So the guidance you said, why not be soft on guidance? Everybody else is pretty, pretty conservative. I got to think there's some sandbag in here as well. Even though it was pretty good guidance. So I think it's actually, I don't know, more, more, more. Better.
- [33:08]
Courtney Reagan
More better. I like that. I think, I think so too. Right. I mean I think everyone is a little bit, is a little bit conservative. But I think even if tariffs increase more substantially, at least on these countries that we know they source so little from there that it's fairly controllable. And Gap has a pretty good history and then even most recently under this new CEO of doing fairly well operationally to sort of manage those cost inputs, whatever they may be, even if they are on the high end. I think it's really the sales and sort of that cool factor that they've been chasing for a while that has been harder to find. And it seems like it is starting to resonate really in all of the banners. As I pointed out, Gap maybe most impressively, but Banana Republic also turning positive. That's fairly notable too.
- [33:49]
Melissa Lee
Court. Thanks, Court Reagan. And do not miss an exclusive interview with the CEO of Gap, 6pm Eastern Time on Mad Money right here on CNBC. What do you make of this big move in the after hours?
- [34:00]
Karen Feinerman
Well, you know, we've seen some of these stocks, especially in the retail apparel space where there's been this reinvention. You know, Gap is such a great story coming out of COVID because it was an opportunity to really go through a painful restructuring that was probably fast forwarded. This is stock that's really had had an amazing recovery and some of the, the core brands underneath that actually were the ones that were failing are the ones but outperforming. Bottom line here is it's an incredibly competitive space. I think margins are something that are very cyclical. I don't think you need to be chasing it here. And in fact I think there's better places to go in peril.
- [34:29]
Melissa Lee
Yeah. Athletic, you're pointing out, was weak, which is interesting given the competitive landscape here.
- [34:33]
Guy Adami
Yeah. And I think it's the this sort of, I don't know, coming out short on the short end of the competitive landscape. Viori I think and Aloe both. But I thought the rest of it was really, really good, particularly Gap. And I actually, I want to disagree with my esteemed panelists, co panelists what we do here, I actually think it's better tonight at this price than it was today at that price. Because why, I mean and to still have decent guidance. Right, right.
- [35:00]
Melissa Lee
In this environment. Yep.
- [35:02]
Dan Nathan
Guy operating margins were actually pretty good for them. I mean they're operating better without question athletic drag. But I think you probably knew that going in. And when you have comps, same store sales beat of that magnitude, it shows that maybe they're turning the corner. With that said, I'm sorry with Tim on this one, you know, 19 was sort of support for a long time. We're 22 and a half now. You know, maybe it's got another buck or so left in it. But I think you're looking for places to take profit here.
- [35:25]
Melissa Lee
Coming up, Tesla's been tanking as its CEO spends his days at the White House as Elon Musk need to refocus or hand over control to someone else. We'll take a look at that next. And Netflix not immune to today's drop while shares got hit so hard in how our traders are handling the move. We'll debate that when Fast Money returns. Welcome Back to Fast Money. Tesla shares down more than 5% today with the stock on pace to notch a seventh straight down week. And after a big post election run up shares now 43% below their December 17 closing record. The downdraft coming as CEO Elon Musk takes on a more prominent and polarizing role in Washington than originally thought. Also sparking a wave of protests and incidents of vandalism at Tesla facilities here in the United States and also in Europe. For more on the company's reputational challenges, Yale School of Management executive fellow Gotham Mukunda joins us now. Gotham, great to have you back.
- [36:24]
Michelle Meyer
Melissa, great to be back.
- [36:25]
Melissa Lee
You know, from a shareholder perspective, it's easy to say, you know, Tesla stock is down. Elon Musk is spending all his time elsewhere. He's making polarizing comments about the far right in Europe, etcetera, etcetera. But how, how does that get played out in the boardroom if shareholders going to complain? I mean, don't you need harder proof than that?
- [36:43]
Michelle Meyer
So it's not so much a harder proof. Problem is that some of the threats are pretty obvious, right? The drop in popularity. Tesla sales in Western Europe are going down and Australia are going down. Given the relations between the Trump administration and Canada, it's difficult to imagine anybody in Canada buying a Tesla sort of for the foreseeable future. But I think there are two bigger threats that are likely to be real to be things that if I were the board, I'd be keeping my eye on. One is Tesla still makes a lot of money in China and the Chinese government essentially has the ability to use that to put leverage on the second most powerful person in the United States. There is the odds that they will not use that leverage have to be about 0%. And so that's a real threat to a pretty significant chunk of Tesla revenues. And the second one is Tesla is the publicly held company that is most dependent on its image of its CEO as a genius. When you're doing the sort of stuff that Musk is doing and waving chainsaws around on stage, you might start to threaten that a bit.
- [37:38]
Melissa Lee
So you think it's a foregone conclusion that they will continue to feel a pinch on China because they're going to be a bargaining chip, basically.
- [37:44]
Michelle Meyer
The Chinese government has demonstrated that it can have huge effects on the, on the Chinese EV market whenever it wants to be. Wants to. If I were advising them, I would tell them, look, this is the biggest avenue to influence the American government we've ever had. We'd be crazy not to use it.
- [37:59]
Melissa Lee
There have been CEOs in the past that have done other things. Gotham. I mean, I'm thinking of maybe Jack Dorsey, who ran two different companies at the same time, publicly traded companies. And so to say that he is spending all his time at the White House and therefore can't have control over his other companies, it may be a difficult argument to make. So what do you think the board should do or are obligated to do at this point? If perhaps, and I feel like they believe this, that he is such a genius and he is the founder of the company, that no one can really replace him even if he is spending less time there.
- [38:32]
Michelle Meyer
So it is a difficult argument to make, which is why I'm not making the argument is not about a split in his time. He's demonstrated an ability with SpaceX and Tesla and God knows what else to do, that it is that the activities that he is using in the US government, which of course dwarfs everything else he's ever been involved with, are so profoundly antagonistic to sort of some of the things that make Tesla popular, profitable, that that is a threat that isn't manageable in the ways that a division of his time is.
- [39:04]
Karen Feinerman
Hi. I guess my question is ultimately if you think that Tesla's management is a masterclass class and bad corporate governance, why are they getting away with it? You know, I've spent my career at least using a corporate governance scoring as a major part of how I decide who I want to invest in. Why is it that Tesla look at different times? They are punished but it seems as if the market doesn't really care in Tesla's case. And if that's the case, does this speak more broadly in terms of investing period? Should we are there companies that will no longer be held to a corporate governance standard?
- [39:38]
Michelle Meyer
You only find out who's naked when the tide goes out, as Warren Buffett famously said. And for all of the drop in Tesla stock in the last since Trump took office, net net, if you're an investor in tunnel over Tesla over any particularly long time horizon, you're going to be pretty happy right now. As long as that remains true. I think people are going to look the other way at the corporate governance. But realistically this company is acting more like a meme stock than it is. You know what it is the most important car, the most important electric car manufacturer in the United States and I suspect other companies that have that kind of adulation around their CEO are going to get a similar slack from the gut from the market whether or not they should.
- [40:16]
Guy Adami
It's Karen, just a quick question. Do you think there is some amount of pain in Tesla stock that Elon will find too expensive to continue in his doge role?
- [40:27]
Michelle Meyer
You know, I suspect that depends on the financial leverage that he's may or may not have taken on for his other activities. But Elon in a very meaningful sense is post economic. If he had 1% of his current net worth, there would still be nothing on earth that he cannot buy. And the exercise of power and influence and well, interest rate, I mean running the US government might just be more interesting to him than running Tesla. So I don't think economic factors are going to be the thing that constrains his activities.
- [40:53]
Melissa Lee
Got always great to speak with you. Thank you, thank you. Kinda of Yale. What do you think of the stock?
- [40:58]
Dan Nathan
Well, you look at the July of last year's high, it was like 255 to 60. Look at where we just traded down so that that resistance, prior resistance becomes support and I think across the desk we thought there's a chance we'll get here. Well, here we are. So if you look at a play a little stock market, you're going to get One of these countertrend bounces along the way. I don't know what can be the catalyst for it, but this is a good an entry level as you've seen in a while in Tesla.
- [41:20]
Melissa Lee
I think there have always been questions about the Tesla board and its independence and its efficacy. And you're pointing out that you just didn't make any sense to you.
- [41:29]
Tim Seymour
Well, he owns the board, right? And the chairwoman of the board is in Australia. I just think that's the oddest thing. But if you think about this, I.
- [41:36]
Melissa Lee
Don'T Australians out there, I love our friends.
- [41:40]
Karen Feinerman
They might still like us.
- [41:41]
Melissa Lee
I just, I guess not. Coming to Fast Money Live on June 5th.
- [41:44]
Tim Seymour
Listen, my point is very simply, you know, Elon is the CEO of a company. He actually, the fundamentals have been really bad. I think he's made some massive miscalculations. And who the heck am I to say that? But it's been pretty obvious if you look at what they've been focused on. On that last call, he said don't look here at the TVs, look at robots and look at robo taxis. And he's giving these crazy sort of, you know, time periods in which they're going to do this sort of stuff. If he is taken out as CEO, he chooses to leave this stock. If they replace it with like an industrial or an auto CEO, it's down 30%. And it is. The fundamentals are so bad because then you don't believe in all that other stuff. The reason why Jonas over at Morgan Stanley is putting a $600 price target. You can only do that if you believe in the other stuff.
- [42:26]
Melissa Lee
So, Mr. Silver Linings, you're saying that Tesla stock is still much better with Elon Musk at the helm, even completely distracted, completely immersed in doge, not paying a single iota of attention to the.
- [42:38]
Tim Seymour
Company because it is a meme stock. And you have to believe that all this other stuff is going to happen. And he is the one. Even though he puts unrealistic deadlines out there, they ultimately get the there. And then the people who believe on the 10 year, 20 year basis, they finally get rewarded.
- [42:52]
Melissa Lee
All right, coming up, Netflix getting hit hard in today's session. How our traders are handling the streaming move. Next, more Fast Money into. Welcome back to Fast Money. Shares of Netflix steadily sinking today, closing the day down over eight and a half percent. That's its worst day since last April. At a conference yesterday, the CFO said the $18 billion they expect to spend on content this year is quote not anywhere near a ceiling. That number is already 11% higher than last year. So a lot more spend here. Tim, you're pointing this out in terms of finally joining the party in terms of the sell off.
- [43:33]
Karen Feinerman
I think because the stock has been so bulletproof and what I'd like to point out in the good days was the free cash flow generation and that this is a company that actually is really minting money and that we also know they're now raising prices. They have pricing power. They do seem to be in control of the margin. So what they are willing to spend is something that I think ultimately if they're not that worried about margin, it's not a surprise though it's coming back to earth with other stocks that were bulletproof. And at some point this multiple, as you can see there on that forward P E, you know, it's a number that's not, it's, it's not a no brainer at this point. I think you're buying weakness here and somewhere around 880, I think there's a.
- [44:08]
Dan Nathan
Great level go back to December. I mean the stock, I think that time in an all time high, 940 within three weeks was trading down to 840. So we've seen moves of this magnitude. We haven't seen moves like on a daily basis like we're seeing now. But I'm with Tim on this. When you buy weakness.
- [44:23]
Guy Adami
So I'm long and short some calls against it, which is really providing very little comfort at this point. But because it is expensive, I do think there's probably some still more to go. I agree with you. I'd buy it, buy more at some point.
- [44:36]
Melissa Lee
Yeah.
- [44:37]
Guy Adami
Below here.
- [44:37]
Melissa Lee
Does a growth scare, does a recession scare change the outlook though for Netflix in terms of people's ability to weather price increases or even to keep their Netflix subscription.
- [44:47]
Tim Seymour
It feels like it's pretty recession proof. I think we can all agree with that. You know, I think Michael Nathanson of Moffitt Nathan's in. These guys are great, great analysts. I think he had a note out today suggesting that a lot of the benefits from the password sharing is kind of running out here. So some of that revenue growth or that subscriber growth that they.
- [45:03]
Karen Feinerman
Tough comps.
- [45:04]
Tim Seymour
Yeah, that's exactly it.
- [45:06]
Melissa Lee
All right, up next, final trade. Time for the final trade. Tim Seymour, Starbucks.
- [45:20]
Karen Feinerman
Some headlines, maybe some layoffs, maybe not a bad thing. I think you're buying this weakness, Karen.
- [45:24]
Guy Adami
Yes, Gap. If you were long going into this, I think you stay long. I really like this earnings report.
- [45:29]
Melissa Lee
Dan Nathan.
- [45:30]
Tim Seymour
Yeah. This probably won't surprise you, but I like the silver here, the slv. Maybe it plays a little catch over the guy's gold.
- [45:38]
Melissa Lee
Yeah, yeah, guy.
- [45:39]
Dan Nathan
You know, Mel, Tim was saying in one of the breaks, the NHL trade deadline, and she was curious, are we buyers or sellers? Arrangers. And, you know, we don't know. We're sort of in middle.
- [45:48]
Karen Feinerman
I'd be a seller, but I'd be a buyer of Fast Money Live on June 3rd.
- [45:51]
Melissa Lee
Totally.
- [45:53]
Dan Nathan
We didn't even rehearse that. Bristol Myers.
- [45:56]
Melissa Lee
Thank you. Thank you for watching Fast Money. See you tomorrow. Mad Money with Jim Cramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of cnbc, NBC Universal, their parent company, or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion.
- [46:27]
Courtney Reagan
Such opinions are based upon information the.
- [46:29]
Melissa Lee
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 For 140 years.
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Michelle Meyer
MultiCare has been in Washington prioritizing long.
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Melissa Lee
Term solutions, partnering with local communities and.
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Courtney Reagan
Expanding access to care.
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Melissa Lee
Together, we're building a healthier future. Learn more@mycare.org.