Melissa Lee (3:58)

Amy, the response from the Chinese didn't seem to be that thankful, should I say they are seeing. They seem to be a little bit angry about the tone that the President was taking.

Eamon Javers (4:10)

Yeah, I mean, the Chinese foreign Minister putting out a statement that was retweeted, I guess you would say, by the Chinese Embassy here in the US Accusing the United States of trying to blackmail China and saying this is no way to cut a deal. If the United States truly does want a deal, this kind of rhetoric and this kind of action is not the way to do it. So you're kind of left in this limbo, Melissa, which is, you know, does the United States have to walk back the tariffs in order to even get trade talks to start with the Chinese? And the White House is saying the President is not going to do anything unilaterally like that. So if you need to bring the tariffs down to start talks, the White House is saying we're not going to do that. So that means talks aren't going to start. But the White House is saying they're open to talks. So you're kind of left in a bit of a box in terms of where things are going from here. And you're going to need some kind of diplomatic breakthrough to move the needle on this. And right now we don't see, you know, any indication that that's happening.

Melissa Lee (5:06)

Yep. Eamon, thank you. Keep us posted. Eamon Javers, joining us from the White House today. So. So we're in this sort of box here and yet the markets rally, we want to take this at face value in terms of the situation is unsustainable. Tariff levels will in fact come down.

Carter Worth (5:22)

Yeah. So for a myriad of different reasons, we find ourselves with one of these, and I'll use the term Wacky Wednesdays. First, you gave me a mango. For fruit, you typically give me orange.

Melissa Lee (5:32)

It was a joke. Because it's so hard to eat a mango.

Dan Nathan (5:34)

Exactly.

Melissa Lee (5:34)

That's why I gave it to you correctly.

Carter Worth (5:36)

Second, we have a reunification of the old options action team right before our very eyes. Cocoa beware from parts unknown. And third, the fact that you're trying to navigate this market with headlines coming out left and right. I mean, yesterday, obviously, in the aftermath of what we heard, was a fascinating move. I will tell you though, today's move was not all that encouraging to me. 10 year yields which cascaded lower, went the rest of the day, ratcheting back higher. I think they closed unchanged around 439. The Vix at one point today was back above 30. So, yeah, 30. The rally made sense, but not to the extent that a lot of people probably hope for.

Dan Nathan (6:11)

Yeah. Another thing is Monday. Let's just think about what happened here. We came in, all we read about was bearish levels, sentiment levels. You know, the April decline, biggest in 100 out. I mean, it was, you know, everything. It all was at once on Monday at 5 o'clock. The silver lining guy was a bit bearish too, you know, and so, I mean, listen, I don't think anyone was pressing lows right there. Didn't make a whole heck of a lot of sense. But I think the guy's point about how the rally faded a little bit today, I think suggests that there's not a lot of confidence in the back and forth that we've seen since Monday. As far as the narrative as it relates to tariffs. And so really, earnings are going to take, I think, center stage right here. Obviously we're in the middle of it right now. It seems like some of the names that we've been watching have done okay as far as tech so far. You know, Tesla's was an absolute disaster. It rallied a little bit. I want to go back to Raytheon and Northrop. Yesterday, they were both down 10%. These are two massive contractors for the U.S. government. They employ 300,000 people together. You know, that's not a great look. And we keep hearing about these exemptions that might come from the autos, that might come from Apple, might come from all these sorts of things. If you give every industry an exemption, are they tariffs? Are we in a trade war? Like, what are you trying to accomplish? What are the concessions that you're trying to get out of? And you just use the term in a box. I think they backed themselves into a corner. I don't think we actually know what they want to achieve right here. Is it the lower trade barriers? Is it to protect ip? Like, what is it? Do we want them to buy more stuff? Like, I don't get it. They're 30%.

Mike Co (7:40)

Do they know really?

Dan Nathan (7:41)

No, I don't think the administration knows. And I think the Chinese, unless they see a deal from Canada, from Mexico, from the eu, from Japan, they're not jumping first. You know, and I'll just say one last thing. January 2018, that's when the trade war really started in the first administration. They did not have a signed deal for phase one until January 2020. It took two years.

Mike Co (8:01)

I mean, the primary sort of event of the last day days is the volume crush, right? Meaning this unbelievable spike in volatility associ with a drop in the equity market and then an equally impressive bounce, leaving us literally at the midpoint from the high of February 19, from which we plunged to the low, we were down 20%. So it's, it's really a jump of this is what a pair of twos is, meaning there are big hands where you bet big and you say, I've got an advantage, I go for it. And there are moments where it's best to be small. So this is a small ball moment in general, I think if one's playing spy and that kind of thing. But we are not going to get resolved anytime soon. We have goalposts, almost the highs of February 19, the lows of two weeks ago, up 13, 14% off their lows. And this churning is, I would call it high volatility but low variance. And at the end of the day, it's an opportunity for traders, but you also can get Flummox and get twisted and get it exactly wrong very hard. And yet that's the opportunity.

Melissa Lee (8:57)

Yeah. Mike, what have you been seeing?

Christina Parts Negroni (8:59)

Yeah, I mean, the first thing I would say is that, you know, the last two days, of course it's not surprising that we see the VIX index down and we look at the VIX futures which go out a little bit further in time, we can see that there does seem to be some expectation that we're not going to get back to these prior highs. But where much closer to the predictions that were being made about prolonged volatility from a week ago than we are anything close to what we saw back on January 21, right after the inauguration. I think if you take a look at the options markets, what is basically telling you is that we're not done with this by a long sight. And I think that essentially echoes what the Chinese are saying. They're not saying, okay, you can just say, just kidding, and all is well again, we've got a long way to go, I think, before this thing gets sorted out. And I don't think we're going to be seeing the highs we saw earlier this year anytime soon.

Melissa Lee (9:47)

For more on today's market rally and whether it can continue, this is Jack Janice, which joins us now. He is the firm's lead portfolio strategist. JJ Great to see you.

Jack Janasiewicz (9:57)

Thanks for having me back.

Melissa Lee (9:59)

Obviously it's a very volatile time, but insofar as you know, it sounds like we've already seen the worst, that maybe I'm being Pollyanna ish about this, maybe we've seen the worse the tariffs can be. If they're already talking back in trying to relieve the tension between it and China, which is probably the most focus on trade relationship here.

Jack Janasiewicz (10:20)

Yeah. And I think you could look back at that April 2 announcement, Liberation Day, and potentially call that peak tariff, because if you think about what was really enacted, it certainly came in much more draconian than market expectations. And between then and basically the, the low that we saw on the 8th, we had a pretty substantial drop in the equity prices and we look at past drawdowns that are associated with at least mild recessions, you get almost a 20% correction. We almost got there. So from a pricing in of a recession prospects on the back of draconian measures there, maybe that 5,000 level on the S and P really did define that bottom of the range in here so it gives us a little bit of prospects in terms of what that downside risk might look like.

Dan Nathan (11:01)

JJ, how focused on the treasury market are you? You know, yields in the ten year today traded as low as four and a quarter. They almost got back to 440. We know we're working off a level of 450 from just a couple of weeks ago when things were going haywire. Is that an important input to you as you're thinking about where the stock market can kind find its level? It sounds like you think 5,000 might be a low, at least intermediate term.

Mike Co (11:25)

Sure.

Jack Janasiewicz (11:26)

In the treasury market I think is going to send some interesting signals, but what I think is a little bit of a cross current here that's making this a little bit hard to digest is simply the potential for deleveraging and degrossing that we've been seeing. And so I think some of the move that we've seen in the treasury market is a function of increased volatility. As a result, you're getting the VAR limits blown out, you're getting a tap on the shoulder from your risk manager saying, you know, you have to delever de gross and as a result you're selling Treasuries. And I think that might be putting some upward pressure on the market. So as a result, it's tough to sort of fish through what's technically driven here versus fundamentally driven with regard to what's going on in the treasury market. So that complicates things a little bit.

Melissa Lee (12:04)

Right. You mentioned the 20% or the almost 20% drawdown that we've already seen, Jack. But you know, in typical recession, the P E, the forward PS are much lower than where we are now. So how do you sort of reconcile that drop, saying in past drawdowns, pricing recession is 20% versus the turns that we would have to take lower on the P E side in order to match a recessionary environment.

Jack Janasiewicz (12:26)

Yeah, and typically in these recessions you get a P E multiple that compresses somewhere between 20 and 30%. But what happens is then we finally start to see that E in the P E starting to adjust lower.

Dan Nathan (12:37)

Right.

Jack Janasiewicz (12:37)

Prices. With regard to the stock market, we already are pricing in that discount where analysts are a little bit slow to adjust. And so what happens roughly about halfway through that earnings downgrade, you actually start to see PE is expand. That's because you're finally seeing the E catch down, so to speak. So you know, you get, you're pretty close to some of that revaluing with regard to that multiple Maybe a little.

Carter Worth (12:58)

Bit more to go.

Jack Janasiewicz (12:59)

But again, we put all these things together. It's an art more than a science. And we're pricing in quite a bit of potential slowing here when you get down around 5,000 on the S&P.

Melissa Lee (13:07)

All right, JJ, great to see you. Thank you. Jack, Jenna, secrets.

Jack Janasiewicz (13:12)

Thanks for having me.

Melissa Lee (13:13)

All right, let's get to a couple of tech stocks here on the move after earnings starting with IBM shares reversing early gains and now sharply lower after reporting reporting earnings and revenues at topped expectations. Guidance for the current quarter also coming in above estimates. Texan, by the way, on the other hand, moving higher after a top and bottom line beat. The conference call kicking off in just the last hour. Christina Parts Nebulous is here on set with the latest on both. Christina?

Pippa Stevens (13:35)

First, everybody should listen to this call because he is the most outgoing, dynamic CEO and gives a lot of clarity. And the first question that was posed was really about demand pull through because guidance came in higher than anticipated. That's a major concern across the chip space. He said there was two major reasons why he doesn't necessarily think it's demand pull through. First one is it's the bottom of the cycle. So they're seeing demand improve across personal electronics, enterprise communications equipment, industrials is joining that mix and that is a big part of their business. And then the second point is that customer inventory levels are so low. So he pointed to those two reasons. But he did say there is potential impact on our customers, our suppliers and also now on our revenues when. And this was in reference to the tariff concerns. And the other third, last point that stood out to me as we talk about reshoring all the time. He was just asked about what his custom customers want when they're, when they have all these different fabs. And he said customers don't ask for domestic manufacturing plants. They ask us for dependable capacity footprints, which I think is telling to a.

Melissa Lee (14:33)

Certain degree and probably lower prices, which won't be achieved by bringing manufacturing back here.

Carter Worth (14:39)

So it's Texas instrument. It was a good quarter. The guidance was good as well. And look at where it just traded down to. I mean, Carter can speak to this, obviously, but we got down to the 10-20-23 lows in Texan held now bouncing so level again, you're looking for levels to trade things off of. And this is one of them. Now, I don't get too carried away because we're basically getting back where we lost during the day today. I think with all that said, I mean, I think you can buy Texas Instruments here.

Mike Co (15:03)

I mean, it's like so many tech stocks under a lot of pressure. The question is, can you get a bounce, a snap, a trade? But the damage is done and you don't recover the losses of the past nine months quickly. Remember this stock peaked in November, Mark. That's three months before the market peak. But, but for IBM, and that's really the headline, it's just a classic example. There's no such thing as good or bad news. There's only news and it's how the market reacts. The earnings were a beat, the revenues were better, but the stock is down. So obviously they were not good, they were bad.

Dan Nathan (15:33)

Christine, what do you expect? I mean, obviously all the exposure. Industrial automotive, you just mentioned that and you talk about, you know, their customers who basically don't have an inventory problem or the inventories were really low, low of the cycle. The CEO is really optimistic. But let's be clear, we're hearing this all around. There's a pull forward, right? And so I just find it like a really odd thing like you had the opportunity as it relates to forward guidance to kind of, you know, have a muted sort of thing. So I'm just curious how you're taking that all.

Pippa Stevens (16:00)

And the guidance came in much stronger, even seasonally. I think one point that he did say, which was interesting, interesting is that of course customers wouldn't tell us why they're buying. And I think we have to keep that in mind for almost every single earnings report out there that has to do with, let's say, hardware or buying products as a whole. Custom customers aren't going to tell you. So he's going to be optimistic and say this demand is going to continue, but to your point, may not. Right. It's a lot of pull forward and customers aren't going to really tell you why they're doing so.

Melissa Lee (16:28)

I mean, it seems like a big leap to assume that the demand that you saw in the first quarter is going to, you can extrapolate that through to the rest of the year.

Pippa Stevens (16:35)

He's saying, well, the reason for that is because we're seeing demand actually improve across all categories. And he said it was a real recovery. A real recovery that has nothing to do with a pull forward is what he's implying.

Melissa Lee (16:48)

But he did also say the customers are not telling them why they're buying. So how can he say it's a real recovery or real demand if he can't tell?

Pippa Stevens (16:55)

You should have been on that call.

Melissa Lee (16:56)

It makes sense. Mike Co. Does it make sense to you, do you believe what Texan is saying about demand?

Christina Parts Negroni (17:03)

Well, I mean, I'm going to take them at their word and I think that that does make some sense to do that. You know, we are trading at what, you know, close to a four year low in, in this one. And you know, we are looking if, if they are going to be consistent with sort of what the street was expecting, which. And it sounds like it's better than that now. You know, this thing was trading 23 times next year's full year estimates. So it sounds like it's on track to do that. And that would represent 20% year on year April adjusted EPS growth. So from my perspective, I would take this as, as a positive, frankly. And I don't know that up 5% really makes it all that much more expensive. I would say it's actually cheaper now than it was before the close.

Dan Nathan (17:48)

Mm, I got something.

Melissa Lee (17:50)

All right.

Dan Nathan (17:51)

Okay. So we learned this from the supply chain issue in Covid, right? Like they might not be telling you what's going on. They cannot. If you're a buyer of these chips, you know, you're double, you're triple ordering right now. I just, I'm shocked because I'm sure this. I don't know who the CEO is. I don't know what he does, but what I'm.

Carter Worth (18:05)

I don't know how he makes.

Dan Nathan (18:06)

I don't know how he a living. But it just seems kind of odd to me that you wouldn't kind of give yourself a little more room at this point. Because if they find out when they report in three months, you know what I mean, that the demand fell off, then the company has a massive credit.

Melissa Lee (18:19)

Here's the flip side to this though. Why, why wouldn't they take the pass? Maybe because they're so confident. They're so confident in this environment.

Pippa Stevens (18:28)

Well, lam research, same thing. Their earnings came out today after the bell. The guidance was a little bit stronger than street anticipated. And then one last point. China. He did say right before I came on set that competition intensifying across the board from China. And this was happening well before this whole tariff conversation.

Carter Worth (18:44)

All good points. You know, again, this is a tactical trade here. I think, you know, valuation is what it is. But the fact that we traded down the levels we last saw two years ago and held to me is encouraging.

Melissa Lee (18:52)

Christina, thank you. Good to see you, Christina. Parts Nepales coming up. Much more on today's market rally as stocks surge for a second straight day. What CME Group's Terry Duffy has to say about the recent market moves and how it's affecting his business. But first, a few names on the move after hours as Chipotle, Southwest, Alaska Airlines all report results. The details and the numbers from the quarters next. Don't go anywhere. Fast money's back in two. Ryan Reynolds here from Mint Mobile.

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Melissa Lee (19:57)

Go to cnbc.com stream now. Welcome back to Fast Money Earnings alert on Chipotle, the stock moving lower after reporting an earnings beat but revenue miss on Q1. Pippa Stevens, more on the numbers. Pippa. Hey Melissa. Well, the stock is taking a hit as same store sales fell 0.4% contracting for the first time since Q2 2020. While analysts were looking for positive comps of 1.7%. The company pointing to a slowdown in consumer spending. The call underway right now with CEO Scott Boatwright saying off the top that in February they began to see the elevated level of uncertainty felt by consumers starting to impact spending habits which drove a quote, meaningful change in the underlying transaction trend which has continued through April. The company adding the benefits of its menu price increase was more than offset by inflation. Now Chipotle did say it expects to return to positive comps by the second half of the year, although they did give tempered full year same store sales guidance of low single digit range compared to prior guidance of low to mid single digit range. Melissa thank you. Pippa Stevens. They actually did a visitation study where concerns about the economy were over overwhelmingly. The reason why consumers pulled back on their number of visits, well, as I.

Carter Worth (21:10)

Mentioned for me yesterday was a little bit of a Taco Tuesday, mom. So I went to cmg, believe it or not, obviously didn't make it into this quarter's report. Maybe they'll save it. But with that said, I mean these are the worst comps since COVID which is disappointing. Margins hanging in there. Revenue was up. I Think six and a half percent year over year. So there's something for everybody. It's expensive on valuation. If you believe them, the comps are going to reaccelerate. You buy the weakness right here.

Melissa Lee (21:36)

Is this one of these stocks, Maiko, that they're such good executors, they've got such a loyal customer base, one that's perhaps a little bit wealthier than some of the other fast casual chains that it's one, relatively speaking, that you'd want to bet on.

Christina Parts Negroni (21:51)

Well, I think it's better than some other places that you, you could go in the space. But I still think that, you know, we basically have a consumer that's under considerable distress. We actually have seen some data on higher end consumers and some delinquencies in areas we wouldn't normally expect it. And that of course is speaking to the demographic that you just addressed as a potential reason to buy it. On the discount that we have here, if you're looking at maybe 11% year on year growth and the stock's not overwhelmingly cheap, I think you probably will get an opportunity to pick it up at slightly lower prices.

Melissa Lee (22:24)

How does that chart look, Carter?

Mike Co (22:25)

Yeah, my anxious to stay away from this. I mean some of the real high flyers, speaking about brands that are loved, Wingstop obviously for instance, Kava, they're all. I'd leave them alone, stay away.

Melissa Lee (22:36)

For the first time ever, when it comes to Chipotle, we didn't say the.

Carter Worth (22:41)

Two words burrito, blowout baby, because you know, people are waiting for me to say it. So I just said it basically. Listen, the stock, if you look at it, I mean it's sold off pretty significantly since I want to say April of last year. Really haven't had a meaningful bounce. So you're getting to levels where yeah, valuation is still stretched, but not nearly as much as we've been historically.

Dan Nathan (23:01)

Carter, really quickly, McDonald's we're talking about on the desk earlier in the week. It's been consolidating. It's one of the very few stocks I see on my main page that's above its 200 day moving average. Looks like it wants to break out. You playing breakouts in this market?

Mike Co (23:12)

Yeah, it's funny, a lot of of incomings on that, of course last two weeks. The relative strength is incredible. Right. Compared to Starbucks, it's acting truly like a staple. It acts as well as Coke. My hunch is it's a trap. It doesn't have the torque or beta to break out, doesn't report earnings for two or three weeks here too, I'd say. Stand aside.

Melissa Lee (23:31)

All right. Coming up, more after hours action in the airline space. Southwest and Alaska Air both out with results. The details from the quarters next. You're watching Fast Money live from the NASDAQ markets out in Times Square. Back right after the introducing cnbc, the.

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Melissa Lee (23:54)

Go to cnbc.com stream now. Welcome back to Fast Money. We wanted to introduce CNBC's newest subscription streaming product, CNBC Plus. It's where you can stream Fast Money and a lot of your other favorite CNBC shows anytime, anywhere on the go and also on demand. So if you can't catch Fast Money in real time, watch us later on CNBC plus. What you're seeing on the screen right now is our CNBC plus data feed, which gives you an enhanced data view the latest headlines all throughout the business day so you can get Fast Money plus lots of additional headlines and extra market information. Meantime, Southwest and Alaska Airlines also reporting earnings after the Bell shares the Southwest dropping despite a top and bottom line beat. The company is warning it's difficult to forecast guidance, even the macro given the macro uncertainty. And Alaska Airlines also lower those numbers out in the last few minutes. CNBC.com's Leslie Joseph joins us now for more on the reports. Leslie, let's start off with Alaska. How is that shaping up since it looks like the earnings are just out? Hi, Melissa. Yeah, so Southwest, excuse me, Alaska, they have missed on the top and bottom line what we are hearing from airlines. There is kind of a very uncertain economic environment. We heard it from Delta. We heard it from United. We heard it about an hour ago from Southwest Airlines. And we're hearing a little bit of a similar take take from Southwest. I did get a chance to speak with the CFO of Southwest or of Alaska Airlines earlier who said that there is still demand. The question is at what price are people filling these planes? So you might see a lot more deals. Really great time to find some fare sales and things like that. Was there any color, Leslie, from the Southwest CEO about when the demand started dropping off and if it's continuing as strongly into the second quarter? Well, Southwest did warn that their revenue, their unit revenue could fall in the second quarter and that's not really what investors want to see. You know, second quarter we have holidays, it's the, you know, end of spring travel into that summer season and kind of those graduations and celebrations and a lot of people like to take their vacations. Then second and third quarter are very important to airlines. So they are warning about that revenue could be flat to down 4%. So what we're hearing also from Southwest is that they are not going to reaffirm their 2025 EBIT. They're not going to reaffirm their 2026 EBIT. So there is like this intense uncertainty that's going on right now and the airline CEOs are being very cautious about what they want to say as they go into this period. You know, we saw the stock market drop and we're up, we're down. And a lot of that seems to be translating to bookings as well. What we have heard as well is that bookings have, have somewhat stabilized. But then it raises the question at what price are these airlines filling the planes? Right. Leslie, thank you. Leslie Joseph, pleasure. All right, Michael, what do you make of these reports? I mean these two airlines are more leisure centric and that's exactly where we see the slowdown sharpest.

Christina Parts Negroni (26:47)

Yeah, I don't really care for those two, but I think that both Delta and United are starting to look kind of interesting here. I mean, if you think about it, if you look at the pandemic lows for those companies, it's only about 30% lower than where we are right now. And we also see oil prices, you know, trundling around four year lows right here. And that's obviously an important cost factor. And you know, remember we had Benjamin Smith on Air France, KLM CEO and they have a joint venture with Delta and they were saying that they've actually seen their load factors basically at all time highs for the, you know, for the business. So, you know, I look at this and I kind of think, you know, the downside is probably a little bit more limited for both of those. I'd probably stay away from Southwest Alaska though, and the like.

Carter Worth (27:30)

It's amazing. Southwest, I think made its all time high four years ago. Since then it's been an awful stock. But look at where we're about to trade down. We're about to trade down the levels we saw in October of 2023. Sort of 22 and a half. 23. So for a trade, I think it probably gets over the next couple of days Southwest at those levels. I think it's interesting, Mel.

Melissa Lee (27:49)

Coming up, tariffs, market volatility, earnings season. We're in the thick of it. And CME Group's Terry Duffy is here to lay out how his firm is navigating all the swings. He joins us When Fast Money returns, returns back into welcome back to Fast Money. Stocks surging for a second straight day but closing out well off their highs. The Dow jumping more than 400 points but over 1000 points at the highs of the session. The S and P up more than one and a half percent. And the tech heavy NASDAQ leading the gains climbing two and a half percent. And speaking of tech, check out the SMH semi ETF outperforming the NASDAQ today as chip stocks help leding the broader tech bounce. And two I stock stocks doing well in that group. Vertiv holdings and Amphenol both surging more than 8%. Maybe that trade is alive and well, Dan, because that's what they talked about, demand.

Dan Nathan (28:34)

Yeah, I mean listen, it's going to be on the edges. It just really depends and we're going to get from the hyperscalers. I think that's first and foremost what they're doing with their spending. If you see any pullback at all from some of those CapEx numbers that we saw given out just three months ago, it's going to tell you that end demand is not really there and these guys are going to continue to build out their infrastructure in search of a product that customers investors want to buy. But that's probably more towards the back half of this year.

Melissa Lee (28:59)

Early next, CME Group shares falling almost 2% today despite reporting record trading activity and revenue for its latest quarter. The world's largest derivatives marketplace saying the volatility caused by President Trump's tariff policy boosted its business. Joining us for CNBC exclusive Terry Duffy, CME Group chairman and CEO and an avid fast money watcher. Thank you Terry, for, for that and thanks for joining us. Great to see you.

Terry Duffy (29:22)

Thanks Melissa, appreciate it very much.

Melissa Lee (29:25)

We saw unprecedented volatility, you saw unprecedented volumes across products in the quarter, Terry, and I'm wondering what your projection is if we, if we are to believe that we've seen peak tariffs in so much as maybe the tariff levels are the highest they've been and it starts rolling off. Do you think the volatility continues? Do you think that ballast your business continues?

Terry Duffy (29:48)

I do, Melissa, for several reasons, not just for tariffs. I think there's a whole host of reasons. Volatility is a component that we have to live with in this world for going forward for many more years to come. And let's start out with what we're sitting on from a debt perspective just here in the United states alone at $38 trillion and operating at a $2 trillion a year deficit spend by our government. We're looking at record debt across whether it's markets, student loan debt, mortgage debt, credit card debt. There's a whole host of things that are going on here. They're going to increase with volatility. They don't go away. I said this just recently at a conference. You don't get the luxury of not participating when volatility continues to rise like this. The markets are all over the map and you need to make sure you're managing that risk. So it's not just terrorists, Melissa, that's causing Nevada. There's a whole host of other factors and I'm not even referring to the geopolitical factors that's going on between Russia, Ukraine, potentially China, Taiwan and also in the Middle East. So there's so many different factors going on around the world where volatility can rear its ugly head in no time at all.

Carter Worth (30:56)

Well, you know what I think of you, Terry. I mean, I've said it publicly, I've said it privately. I think you're one of the great CEOs in the country. And you know, very quietly, the environment that we find ourselves in is the one you and your team have been working towards for a long time. But let me throw you a bit of a curveball that I know you can hit it. Over the last year, you've given back about $5 billion to shareholders very quietly. Not a lot of fanfare out there. Talk about sort of the clarity you must have to have and the importance of rewarding this long term shareholder base.

Terry Duffy (31:26)

Well, I think it is really important when you look at, I took this company public back in O2 and we've been returning capital to shareholders ever since. I was a dividend paying stock before it was invoked. And you know, if you were, if you were paying a dividend, you were not a growth company back in 2002, as you recall. But we've continued to reward our shareholders along the way. My board just authorized a repurchase program of $3 billion for us to go ahead and participate in. We will be opportunistic in doing so, but I think it's really important to reward your shareholders. And you talk about my dividend. My dividend has been growing year over year for the last 15 years. Shareholders, we want to continue on that path. We believe in rewarding our shareholders. These are difficult businesses. It's hard to predict volumes. 80% of our revenue is tied to transactions. As you know, guy. And you know, I think we are in a really sweet spot right now by not Being, you know, hither yitter and yon with our revenue of diversification, we are in a very strong position transactionally and I think our shareholders will benefit from that for many years to come. And that leads up to my last answer, what I gave Melissa on volatility, because I think that's here to stay in. Risk management is not going away. It's only going to get more important if you want to survive in today's climate.

Dan Nathan (32:42)

Hey, Terry, I want to put those two things together, right? So you've been coming on the show for an awful long time. You talk about the products that change trade on your exchange for risk management purposes. But in an environment like this where you see what you call unprecedented volatility, it seems like this is great for traders, institutions, they're going to kind of hedge up a little bit. But when you're seeing these sorts of moves and so many different products on a day to day basis, it seems like there's really a lot of opportunity to kind of trade them and use your products.

Terry Duffy (33:09)

Well, that's true, Dan. There is a lot of opportunity for people to manage and mitigate their risk in our products and that's exactly what they should be doing. But I think what's really important is the volatility. It should be fundamentally driven and we want to make sure that we're not just chasing our tails on rumors and speculation constantly. So I think the credibility of the US market, I don't want that ever to come under question. And that's always a concern of anybody in financial services or in any other business is the credibility of your product. So I think the US financial system is the envy of the world. We need to make sure we keep it that way. And we don't just want to have volatility be a component of it. Dan, as you know, volatility is one of the components that makes market moves. It's not the only component. So. So it is opportunistic for the people who want to participate in and out of the market. But it's also really important for our marketplace for the producers of products to be able to do risk transfer so they can run their businesses. So the deep pools of liquidity that CME provides is very important for the end user and also for the producer.

Melissa Lee (34:14)

At the same time. Terry, are some of the new products contributing to the volatility? And I'm thinking most specifically about zero day options. Options.

Terry Duffy (34:23)

You know, that's a great question, Melissa. I think when you look at zero dated options or any other product, I Don't think they contribute to the volatility. I think it's the conversation or the information du jour that contributes to the volatility, not the product itself. So when you look at zero dated options, these are new products that have become popular mostly with the retail crowd. And for CME, about 20 to 24% percent of our options trading on futures is zero dated options. The rest of it is traditional quarterly expiration of options. So we don't have as much as other institutions might on zero dated options. But I think it's really important, Melissa, not to blame a product for volatility. The volatility, the product is just an aftershoot or a component of what the news of the day is to create that volatility, not the product, product itself.

Melissa Lee (35:16)

Terry, it is always great to see you. Thank you so much for joining us.

Terry Duffy (35:20)

Thank. Thanks Melissa. Appreciate it very much. Guy. Dan, thank you very kindly.

Melissa Lee (35:25)

Terry Duffy of the cme. Michael, do you agree with Terry in terms of, you know, the zero dated options are sort of a sign of the volatility or manifestation as opposed to a cause?

Christina Parts Negroni (35:36)

Yeah, I mean to his point, first of all, you know, I used to have a seat on the New York Mercantile Exchange which was absorbed by cme. So that's where the energies are, the comax also that's where gold is. And obviously that's certainly a topic du jour. You know, 40% is probably typical in the more retail oriented exchanges. So if you're taking a look at say SPY options or you're looking at SPX options, you're going to see more retail flow. The stuff that is trading on the CME oil futures were never a retail product. It's 1,000 barrels, you know, it's 10,000 units in the natural gas contract and it's 100 ounces in gold. So. So when you start taking a look at the products that the CME trades, it was institutional by nature to start, so I wouldn't expect to see as much retail flow there. Of course they're more transaction based. A lot of the other exchanges are more data oriented. So of course they're going to benefit. And I think people should be taking a look at the products that they offer on the CME because I think they're going to be much more important, not less in the coming years.

Melissa Lee (36:35)

Coming up, a few of today's stock moves catching our attention. How our traders are handling the jump in Boeing and the drop in Bristol Myers that is fast money's back in June. Calling all fast money fans Join us.

Dan Nathan (36:48)

For our next live event Thursday, June 5.

Melissa Lee (36:51)

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Dan Nathan (36:56)

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Melissa Lee (37:00)

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Christina Parts Negroni (37:02)

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Terry Duffy (37:06)

The experience was awesome.

Mike Co (37:08)

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Melissa Lee (37:10)

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Dan Nathan (37:12)

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Melissa Lee (37:22)

Welcome back to Fast money. Boeing jumping 6% after a better than expected earnings report this morning. The planemaker posting a narrower first quarter loss and burning less cash than expected. CEO Kelly Ortberg telling CNBC earlier today he expects the company to be cash flow positive positive in the second half of the year. It is the B and tube, correct? Or is it Baba?

Carter Worth (37:43)

Let's get crazy here. I think in band it's banned.

Melissa Lee (37:48)

It's A. Being banned. Right in your B is Bob.

Carter Worth (37:50)

I want to speak to Tim.

Melissa Lee (37:52)

Anyway, you liked Boeing.

Carter Worth (37:53)

I did. And we talked about last week. Yes, Karen. Yes, all of us. You know, what are you looking forward to next week in terms of earnings? And I said Boeing. And that probably didn't make a lot of sense, but I think this is sort of what you wanted to hear. For the first time in a while, you're hearing something, some encouraging things on the margins in terms of free cash flow. Now I think it was getting down to 135 wherever. Trade it down to on the back of those China headlines. But I still think Boeing could surprise people in the back half.

Mike Co (38:17)

Yeah, I mean, it's a big move to a difficult level. My hunch would be to harvest if you caught this. Well, yep.

Melissa Lee (38:22)

Okay, now to one of today's laggards. Bristol Myers falling almost 3% after its drug to help treat schizophrenia failed in a phase three trial. The stock had been down, down more than 8% after hours last night on the news. Basically, this takes the drug out of the running. It shows that it's not very much effective compared to the drugs currently on the market to treat schizophrenia. Mike?

Christina Parts Negroni (38:43)

Yeah, I mean, it's a, it's a tough spot, you know, for these guys. And now I think the sort of the negative revenue picture that people already had for the business has only gotten a little bit worse on the back of this. So this isn't one that I would be interested in here.

Melissa Lee (38:58)

All right, well, tomorrow is the annual CNBC stock draft on Power Lunch. Brian Kelly are leading the charge this year and Tim will be joining them to analyze all the picks. And our very own Guy Adami is part of the action. He is teaming up with comedian Sebastian Maniscalco who is currently on his it ain't right tour. Guy and Sebastian have picked number five. So take a look at the rest of the teams. Four time Olympian, soccer star Carli Lloyd, Bobby Fletcher Austin, Kroll of Bravo's Southern charm and Andre Iguodala, the former Golden State Warrior. The teams will make two picks. They'll choose from a list of 60 investments, 57 stock picks plus bitcoin, gold and oil. And the winning team will be one of the the one with the best return between draft day and next year's Super Bowl.

Carter Worth (39:43)

Well, the winning team will be Sebastian's team number one. We spent a lot of time on the phone this week going over, we were strategizing and I will tell you.

Melissa Lee (39:51)

You'Re just shooting the. You know what, I am.

Carter Worth (39:53)

I am telling you that we had a long conversation. We have a good plan in place and you don't want against go against Sicilians in this thing. So it's basically Sebastian Swizzle and everybody else.

Melissa Lee (40:05)

You're going for gold.

Carter Worth (40:07)

I'm not going to give any. I don't want. I mean we're the fifth pick in the draft, Mel.

Eamon Javers (40:10)

We're not going to give any.

Dan Nathan (40:11)

Doing it wrong at an all time high. You got to go the opposite way here. Let's say in a word some of the biggest losers.

Mike Co (40:19)

So bad it's good.

Melissa Lee (40:20)

Tesla, I don't know.

Dan Nathan (40:22)

Not with your money.

Carter Worth (40:23)

You got to tune in tomorrow.

Melissa Lee (40:24)

All right, we've got breaking news out of the White House. Eamon Jarvis has got more. Eamon.

Eamon Javers (40:28)

Melissa. That's right. Take a live look into the Oval Office right now. You'll see that President Trump is taking questions from reporters. He was just asked about Jay Powell, the Federal Reserve chairman. He was asked if he has spoken to Jay Powell but he said I haven't called him. I might call him but I believe he's making a mistake by not lowering interest rates. Rates. He's been keeping rates too high. Historically he's been late. Except for Biden. He'll hopefully do the right thing and the right thing is to lower rates. So the President here taking another swipe at Jay Powell. But yesterday in the Oval Office saying he has no intention of trying to fire the Federal Reserve chairman. Melissa.

Melissa Lee (41:05)

All right. Amen. Thank you. Amen. Drivers coming up, selling and nibbling. Morgan Stanley and Novo Nordisk both catching the chartmaster's eye, but for very different reasons. Reasons he will explain next. More fast Money into. Welcome back to Fast Money. Even with gains today, Morgan Stanley and Novo Nordisk both struggling this year. The broker down more than 10% while the pharma giant has fallen even harder, down nearly 30%. The Charmaster has very different takes on these two. Carter, what do you see?

Mike Co (41:33)

Yeah, let's get right to it. So each is a different circumstance and if we start with the first chart, you'll see what I think makes this an interesting juncture. So we have a great uptrend in Morgan Stanley and then you have a hard break along with the market. So it's a concomitant move, drops 33% and then this rally up 23 leaves it to the penny to the underside of that uptrend line, which it breached with the market in February. Second chart on Morgan Stanley. You see what you have here is again a rally to a difficult level. Level likely to hit its head here is worse sellers. Now Novo, on the other hand, obviously this is one of the great winners of the past 2, 3, 5 years which is really on its knees. This stock is down some 60%. Just to put this current sell off in context, there have been 10, count them, 10 instances since the IPO where the stock is at a 20% plus drawdown. The average is about 38. This is 62, 63% and it's almost down to the penny to its all data 30 year uptrend line. We're playing for a bounce.

Melissa Lee (42:40)

All right, so pick your poison. Which one?

Carter Worth (42:43)

Novo Nordisk. I think as I've said a couple of times, I've been dead wrong for a long time. But it's finally gotten the levels, as Carter just pointed out, that actually might make sense here. Mel?

Melissa Lee (42:51)

Yeah. Michael, how about you?

Christina Parts Negroni (42:53)

Yeah, I agree with this Morgan Stanley, because they pivoted to the asset management side, they're not as much of a beneficiary as some of the other financials might be. Due to all of the trading activity that's going on, they're actually going to be hit by lower asset prices. So you know, if you're going to play in the space and certainly in this market environment, those houses that have more trading activity are likely to benefit more than Morgan would.

Dan Nathan (43:13)

Weird connection here really quickly. So we're talking about Chipotle and their customer maybe being a little bit strapped. I just don't know how the banks won't see this the next three months or so. Strapped consumer money centers.

Melissa Lee (43:25)

Oh, I thought you were going to go down the line of of consumers not buying shots.

Dan Nathan (43:30)

Oh, was it just talking about banks?

Melissa Lee (43:31)

He was talking about banks. We were talking about Novo Nordisk too.

Dan Nathan (43:34)

Okay, I like Novo. The five of us, based on his. Wait, wait, did we just. He just talked about banks.

Melissa Lee (43:40)

No, no, I know, but Carter also did a Novo charge. I like. No either.

Dan Nathan (43:43)

I like round trip.

Melissa Lee (43:44)

That entire move covered all the bases.

Mike Co (43:47)

Morgan Stanley. You know, what's the no deals, you know, a lot of volatility, a lot of trading commissions as the prices down.

Melissa Lee (43:53)

Got it. All right, up next, final trades, final trade time. Mike Co. Yeah.

Christina Parts Negroni (43:59)

Tough environment for airlines. If you're going to take a flyer, you got to go. Best of breed.

Mike Co (44:02)

Delta, CBW ID Services, WNS Holdings.

Melissa Lee (44:06)

On the long side, the man with the meta glasses.

Terry Duffy (44:09)

What?

Dan Nathan (44:09)

Texan. I wouldn't chase it here.

Carter Worth (44:11)

The only thing worse than those bro vests which half the audience is probably wearing right now. You know who you are. Are those things that Dan is wearing filming me right now. Nike, I think, is bouncing though.

Melissa Lee (44:24)

All right, thank you for watching Fast Money. See you back here tomorrow 5. For more fast money. 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 Introducing CNBC, the.

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