← CNBC's "Fast Money"
CNBC's "Fast Money"
Meta’s Social Subscriptions… And Building A Cash Buffer Amid Market Irony 5/27/26
00:43:31
Shares of Meta moving higher as the social giant rolls out a new subscription plan for its platforms. What the changes will look like to Facebook, Instagram, and WhatApp… and if the new offerings can keep boosting Meta’s stock. Plus Salesforce reports results, oil continues to pull back, and why a top market strategist is keeping cash on the sideline as a so-called “market irony” plays out amid the uncertainty. Fast Money Disclaimer
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- [00:00]
Edward Jones Narrator
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities, and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, Member, SIPC it's smart to
- [00:31]
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- [00:58]
Melissa Lee
live from the NASDAQ markets out in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Matta moves higher. How the social media giant is looking to add new revenue streams and what it could mean for investors. Plus, crude oil settling at six week lows. JP Morgan dropped some new comments from the CEO. Automaker stocks put the pedal to the metal and health tech startup signals, announcing a new funding round and expanded partnership. We'll talk to the CEO about the deal and the next steps in its bid to revolutionize the weight loss space. I'm Melissa Lee, come to you live from Stud. Be at the nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Dan Nathan and Guy Adami. We start off with that midday move higher in shares of Metta, the company holding its annual shareholder meeting this afternoon, announcing paid subscription options for its Facebook, WhatsApp and Instagram platforms. Julia Borson has more on this and all the details from the investor day. Julia hey Melissa.
- [01:48]
Julia Boorstin
Well, Met is making its biggest move yet into subscriptions and laying out new potential revenue streams with new paid offerings across its family of apps. Facebook plus and Instagram plus will cost $4 a month and WhatsApp Plus $3 a month. They'll give users access to extra features like profile customization, super reactions and insights into who is watching stories. Meta says it will also start testing new subscriptions for businesses, creators and Meta AI users with all the subscriptions under the brand MetaOne in addition to the free version of its Meta AI app and its website the Metal One I will be available for $8 for the plus version and $20 a month for the premium version for access to deeper reasoning and more advanced image and video generation options. This news comes today as Metta also held its annual shareholder meeting where CEO Mark Zuckerberg talked about the opportunity to offer subscriptions in the future to personal AI agents. He also spoke about potential revenue opportunities in selling computing capacity and building a cloud business down the line. So, Melissa, certainly a shift in how Matt is talking about generating revenue.
- [02:59]
Melissa Lee
But to be clear, Julia, the tiers for the subscriptions, this, these kick in basically when you're paying for a higher level of service. Bells and whistles as opposed to just if you have a regular Facebook account or Instagram account.
- [03:11]
Julia Boorstin
Everything you do right now on Instagram, you'll be able to keep on doing. This is for people who are power users, if you will, and want to have extra features, want to be able to tell the favorite creators that they follow, that they love their content, or to be able to get a sense of who's watching their story. So this is really an additional feature on top of what they're already offering their users for free.
- [03:31]
Melissa Lee
All right, Julia, thank you. Julia Boorstin, does this answer, Karen, the question that has been nagging the stock and that is are they getting the return on investment for all of the I spend?
- [03:43]
Karen Feiderman
We don't know because we don't know how that subscription revenue will flow. But I mean, it's going to be high margin, that's for sure. It is to me. Normally you see a shareholder meeting, nothing happens. Right, right. This is, you know something, this is an interesting development. I think it's addressing the Street's fear of you guys are just spending, spending, spending. And what do we have to show for it right now? The underlying business, the advertising is doing great, but the spending is using all your cash flow and all of your excess cash. So this is, you know, clearly them trying to address there is a return on this spend. There's a lot of ways we can do it. And whether it's agents, whether it's selling compute, whether it's being in the cloud business, cloud businesses, there's some heavy hitters in the cloud business already. Not that there's not a lot of compute demand. There's also an extraordinary amount of that. So, I mean, he has an eye on it. This is sort of maybe this, this cycle's version of efficiency.
- [04:34]
Tim Seymour
Maybe.
- [04:34]
Karen Feiderman
I'm not sure. It's not full on.
- [04:37]
Guy Adami
There's no silver lining here. I'm just going to be really honest with you. This is like a dead bang zero. They'd be lucky if they convert 2%. I mean, that 2% of their free users. If you think about Gemini and what they're doing with Google, I mean probably 97% of their users are free and they're like monetized across like probably 10 platforms that have over a billion users. So if you think about what's going on with the lms, I mean Anthropic went enterprise like that's what they've done. They have not relied on consumer subscriptions. And OpenAI actually has a real problem as the first mover in the space. They did convince a lot of early adopters to pay $20 a month. And I'm sure there's no shortage of those business users who are paying 200 of thing. But they're going away from that model because they're going to a consumption model. So you know, when I think about this, it looks like you know, putting lipstick on a pig a little bit. When you talk about the back to
- [05:31]
Tim Seymour
the animal spirit, it's amazing. I know wild we really stand strong as an ox.
- [05:36]
Guy Adami
No, I just, I just, I just think it's funny, you know, the stock rallied 4% on this in market cap terms. They'd be lucky if they get that like that revenue for this business model that they just gained in market cap thing.
- [05:50]
Dan Nathan
Certainly not directed it's swizzle here, number one. Number two, I don't know if it's a dead bang loser but we've been waiting for sort of them to flip the switch on the monetization. Maybe this is the first foray into that. I don't know. What I will say is Since February of 25, Facebook has been a pretty volatile stock for a trillion and a half dollar company. But I think on the margins at an 18 and a half multiple next year's earnings, it's a name you need to own. Understanding that it's going to be volatile both to the upside and the downside. You know, I don't know if this is going to move the needle, but I think you got to be long Facebook here.
- [06:19]
Melissa Lee
Maybe this is at least an acknowledgment that is what they need to start doing well this step in the right direction.
- [06:24]
Tim Seymour
They have acknowledged that they need to find other levers on the revenue side. So I think we're all saying be cautious here and I would say revenue growth. I think the street is expecting somewhere around 19% revenue growth if you get back up into kind of mid-20s and some of these various dynamics I think could move the needle. What's interesting is I would have thought that this type of an announcement sprinkling in AI would have had matter running like a deer through the woods. I mean I really think it's a case where there's still so much skepticism out there and while I see it even 17 times forward. So it's wildly cheap relative to Google. Different stories. Ok, but historically these are the places we, we at least compared the cheap end of the mega cap tech world and now trades 10 turns light to Google. I think you're rewarded by, by owning it here. Just you know, that user base and the number of people around the world using the product. But I agree, we're all still waiting to see what happens.
- [07:26]
Guy Adami
Yeah, I think they're having a hard time seeing the forest for the trees now maybe, I don't know but, but the one thing I'd say is that like on that conference call and I knew you probably listened to it a few weeks ago, how many times did Zuckerberg say basically trust me, trust me. And if this is what he asked shareholders to trust him for, like this is the big unlock as far as their spend. It just doesn't make lot of sense. I just can't imagine if you're a shareholder, like a large shareholder and you've suffered through the volatility the guy just mentioned and the relative underperformance. I mean look at Amazon and Google and Apple, they make new all time highs on a daily basis and that's gone on now for like a couple of weeks and just Metta just doesn't seem like there's anything going on. If anything, today felt a little bit like a short covering rally and maybe you get a gap fill from the earnings but I just can't imagine that this is going to move the needle on a revenue front.
- [08:14]
Karen Feiderman
I don't think of this as the big reveal. I don't think this is, you know, them saying okay, Eureka or we're taking what we've been working on in our workshop for two years and now here it is. I don't get that that's what this is at all. And the shareholder meeting is definitely not the place to do that. So I think it's more what I was saying before, just a nod to we know we need to put up, you know, something, something. Yeah, to show that we are not just all about spend, spend, spend.
- [08:39]
Melissa Lee
I mean this is not, I mean we were talking about this for a long time in terms of within the trade. The ones that are doing well have undergone a narrative change. This doesn't change the narrative. Right. This is sort of an incremental thing. So we're still waiting for that. But do you continue waiting for that with Facebook?
- [08:55]
Dan Nathan
I mean to mention the valuation maybe is off by a turn or so, but the point is it trades cheaper than a market multiple.
- [09:01]
Melissa Lee
Yeah.
- [09:01]
Dan Nathan
And given the moats that I think that they have. Yeah, I do think you wait and you give them the benefit of the doubt, understanding that it's a more volatile stock than I think that it should be.
- [09:09]
Melissa Lee
Meantime, a strong divergence emerging among the big banks with money centers lagging. The names with big IPO and investment banking businesses. JP Morgan, bank of America, Wells Fargo, all in negative territory for the year. While names like Goldman Sachs and Morgan Stanley have seen double digit gains over the past three months as anticipation over offerings from Space X OpenAI and anthropic heats up. Both stocks trading just off record highs and more reason to believe deal activity will continue. JP Morgan CEO Jamie Dimon telling analysts the bank could spend up to $20 billion on acquisitions over the coming years.
- [09:42]
Jamie Dimon
I do think there might be opportunities and so we are on the lookout. But it's got to make sense, you know, it can't be just a sk and you know, pie in the sky type of thing. It's going to make sense, you know, organic, you know, that we can integrate it, that we can the cultural get it, you know, the right way, that it, you know, it adds, enhances our business. And it's not like some separate standalone thing that I have to pray we don't screw up so. Because we have great businesses and we want to continue to build them. But I do think there might be in the next couple years a chance to put 10 or 20 billion dollars to work buying something. And when we do that, we'll explain to you why we think it's a great business purchase.
- [10:19]
Melissa Lee
He also, by the way, said things are expensive right now so the money's not burning a hole in his pocket. Anything's JP Morgan stock is expensive. What do you think?
- [10:27]
Karen Feiderman
Well, he, every time he opens his mouth he wants to just lower expectations. Right. The economy, you got to be careful and all of that. And I understand that that is the job of the banker, but I think yeah, it's expensive on a price to book value. So it's not crazy expensive on a P E value. But I think they've tried to be disciplined before and you know, they've raised the dividend several times. But the acquisition thing I think is interesting. I would think the most likely thing first would be something in the asset wealth management business that Wouldn't be surprising. Maybe it's not. Maybe it's more than one thing. Maybe it's two things and then maybe some sort of fintech.
- [11:03]
Dan Nathan
Yeah, I agree. I don't think it's be 120. It's probably, you know, a couple of fives and maybe a 10 or something like that. You look at Piper Jaffrey, although I don't know if that sort of fits the narrative, but some boutique type of thing. But look at what Jamie Dimon's done. Under his tenure, all the major acquisitions have been in a distressed environment. So I don't know if he's suggesting that something. He's sniffing something out. But they typically buy things when, you know, the blankets, the fan instead of things that are at valuations that don't make a lot of sense.
- [11:29]
Melissa Lee
First Republic being the last one. Also in distress.
- [11:31]
Tim Seymour
Yeah, you could argue he's being cunning as a fox here. But I mean, what I would say is he made it very clear he thought investment banking revenues were going to be at least 10% higher. What we heard about trading revenue from them and bank of America. Moynihan also talked about stocks. Bank of America is going to be up 15% second quarter. JP Morgan indicated 11%. I mean, these money center banks are making, they're as profitable as they've ever been. So I mean, yeah, Goldman's been an incredible trade and they're usually the smartest guys in the room and in terms of the world of innovation and at least where they're possessed and certainly around the deal flow. But JP Morgan and Bank of America and Citibank also have never had more levers to pull. And they even commented on net interest income. Bank of America and said it's absolutely fine and that's 50% of revenue. So I think if you're getting far away from this trade because you think they're expensive, I think they're all rerating and I think you're also well paid to stick around. They're paying nice divs. The capital give back is a big part of the story over the last five years.
- [12:27]
Guy Adami
Yeah, I could see them doing like acquisitions, like native sort of things that kind of fit within these businesses. You know, you talk about 50% of their revenues is NIMs and maybe you look at the other 50% where. And you've been talking about this for a while, Karen. We're going to start seeing, you know, AI agents and applications applied to these businesses. You know, we're going to talk about Snowflake in a sec. You Know, taking all this unstructured data and figuring out how to use it better and getting efficiencies. Jamie Dimon's already talked about, sadly, you know, how many fewer bankers they will be hiring in the future, you know, that sort of thing. So to me, there's companies like Rosepace. I just met this company, they just did a round, Sequoia led it, some, you know, kind of genius founders. They're building again, like an AI vertical, brand new, from scratch and it's geared towards the private equity industry. You know, like stuff like that, just kind of bolting those on and you could say, well, that sounds a bit like, like an aqua hire. But you know, at the end of the day, a lot of the engineers that they have in these places are probably backward looking to some degree and to compete and try to get talent at these Frontier Labs is going to be really hard. So maybe you end up buying some of these smaller companies that are doing the things that really kind of can be complementary to your business and help get that productivity gain.
- [13:33]
Melissa Lee
Let's get more on potential acquisition targets for JP Morgan with Chris Marinack. He's the director of research at Breen Capital. Chris, great to see you.
- [13:40]
Chris Marinack
Good to see you. Thank you.
- [13:42]
Melissa Lee
What would you like to see JP Morgan buy, if anything?
- [13:46]
Chris Marinack
Sure. A private company. I think that $20 billion is a small pittance of their market cap. It's only two and a half percent, so I think it's going to be small, most likely not public. And remember, it's not a bank because they are prohibited from buying banks given their asset size.
- [14:01]
Melissa Lee
All right, so in what areas do you think they could buy and it would make sense for them?
- [14:06]
Chris Marinack
I'm intrigued by insurance. I think banks got out of the insurance business the last two years. It's still a great business. I agree that asset management makes sense. I think a trading platform that is small but nimble in some new new areas could be interesting. Certainly I think there's a possibility for them to do fintech as there's a lot of expertise that they don't have.
- [14:25]
Tim Seymour
Chris. Tim, thanks. What are you doing with your multiples here? Are they drifting higher? Is the sector rerating?
- [14:31]
Chris Marinack
Absolutely. Tim. I think you're all spot on. I think that 10 and a half to 11 times earnings for the banks today should be more like 12. I think we have the return equity, the return assets, the capital returns to match that. I think earnings will be solid again for the second and third quarter. Credit quality continues to be stable. I think losses continue to be Relatively low. And if the banks are wrong on credit, they have a lot of operating earnings, what we call PPNR to cover any shortfalls.
- [14:59]
Karen Feiderman
Chris, it's Karen. Thanks for being on. I know JP Morgan can't talk about the name without talking about succession. Let's say we were to hear tomorrow that January of next year there is a new CEO and it's one of the, you know, contenders that everybody thinks is in the race. How much do you think the stock would fall?
- [15:16]
Chris Marinack
I think you've got probably 5 to 10% downside on that. It reminds me a lot of what happened with Berkshire Hathaway when Warren Buffett stepped away a year plus ago. I think Jamie is a iconic leader and I think it's hard shoes to fill. So the market most likely will penalize whoever comes in there. In the short run, I think ultimately the earnings will speak for themselves and drive the stock better. But I do think you should expect to see some pullback.
- [15:39]
Dan Nathan
You know Chris, Jamie Dimon talks about JP Morgan being expensive. What context to me price to book is expensive. I think that he is right.
- [15:48]
Chris Marinack
Well, he's a higher P E than the rest of the Marketplace. I mean JPM is closer to 14 times forward earnings when the rest of the group is more like 10 and a half to 11. So I think from that context the forward P, while it's not as high as the stock market by any means, it's expensive for a bank.
- [16:06]
Melissa Lee
Chris, you said that JP Morgan wouldn't be able to buy a bank because of its size. But you are expecting a lot more M and A within banks, particularly regionals. Where do you see the tie ups happening?
- [16:17]
Chris Marinack
So I think that there are large regional banks. Think of a truist and a US bank and others like them who I think could consider their next move to get bigger to try to compete closer to where bank of America, Wells and JPM are. I think that you have other 100 to 200 million dollars or billion dollar banks who may want to graduate to the next level. If you see what fifth third has done this year buying Comerica, I think they have more room in the tank to tack on over time. I think performance as you integrate is key. So I think you have to digest what you've done. But I would look for those regional banks to step up to try to push themselves towards trillion dollars over time.
- [16:57]
Melissa Lee
All right, Chris, great to see you. Thank you.
- [16:59]
Chris Marinack
Thank you Chris.
- [17:00]
Melissa Lee
Chris Marink, you know, if banks want to do this, they got to act fast in theory. I mean you would probably want to do it while the administration is still in place in order to get the friendly regulators.
- [17:12]
Tim Seymour
And I think David Solomon mentioned that I don't know the term. There was, there was a lot of intensity and desire to move quickly and I think if you're a JP Morgan adding on the wealth management side and adding in a place where there's innovation around who your client could be also in platforms and trading using technology is where they should be. I mean there's no question that whether it's prediction markets, whether they want to get straight in there or not, there's no question there's a different type of retail investor. There is a ton of money that's been generated by this market and that's a place where you're rewarded on multiple.
- [17:48]
Karen Feiderman
I agree with Timmy on the rerating. I think I like Citibank and JP Morgan both. I mean bank of America probably is good too but I think they're. These are changing businesses.
- [17:57]
Guy Adami
What happened, all that deregulation that was supposed to come right, like that was like a big, you know, supposedly a tailwind into the new administration. Right. We haven't really seen any, we haven't seen any real M and A. You look at the fact that the banks, you know, have not confirmed any of the new highs in the S&P 500 over the last couple of months. We haven't seen the regionals and they were supposed to be a big beneficiary of, of D wrag. I just find it interesting that this group really lags the broader market and I just can't remember a time where you've seen this sort of outperformance by some, you know, big drivers and we know where it's coming from. And then you just have the banks and you know, listen, there is dispersion right now if you look at Morgan and you look at Goldman, they are trading like they're going to bring a bunch of trillion dollar IPOs. But at the end of the day JP Morgan is going to be involved in all those deals and that's not trading particularly well. So to me I just think that's something to keep an eye on.
- [18:45]
Dan Nathan
I always was thought it was sly as a. I mean cunning is fine by the way.
- [18:49]
Melissa Lee
I'm not cutting the fine.
- [18:50]
Tim Seymour
I think cunning is a great word. I don't think it's used enough and I think sly as a fox is probably lower brow.
- [18:56]
Dan Nathan
You know, it's a good point. It's an excellent point by you. Which is why I would. Yeah, I gravitated towards that you went
- [19:02]
Melissa Lee
the higher levels is cunning.
- [19:04]
Dan Nathan
Yeah, well, I mean, actually, if anybody cares, my favorite college was sly.
- [19:09]
Guy Adami
You do best with one syllable words monosyllabic.
- [19:12]
Dan Nathan
Yeah, yeah, it's my history.
- [19:15]
Melissa Lee
All right, coming up, we're watching shares of Salesforce after its latest earnings report. The details and numbers in the latest quarter next. Plus an energy drain hitting crude prices WTI back below 90 bucks a barrel. How much lower could prices go? What does it mean for energy stocks? Do not go anywhere. Fast money's back into.
- [19:36]
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- [20:33]
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- [21:01]
Melissa Lee
welcome back to Fast Money, an earnings alert on Salesforce, the enterprise software giant lower despite posting top and bottom line results at Beat street estimate conference calls underway. Cnbc. Sima Modi has the latest. Hey Sima.
- [21:11]
Sima Modi
Melissa, we're on the call. And CEO Mark Benioff really reinforcing the growth in Agentforce, its key agent platform. With annual recurring revenue now above $1 billion from 800 million in the previous quarter. I also spoke to Salesforce's Chief Operating and financial officer Robin Washington. And when asked about the Q2 guidance which came in a bit short, she pointed me to the full year raise that the company revealed. And in response to the flurry of executive deployment departures to open air and anthropic A story that we've been reporting on. She said we're going to lose some talent to startups. It's the nature of what happens in Silicon Valley and that's giving them the opportunity to elevate, elevate existing talent and recruit this. As Snowflake shares continue to skyrocket, up 32%. Product revenue outlook came in much better than expected. And that Melissa is really throwing cold water on these competitive concerns. The likes from Datadog, which operates rates in the data infrastructure space. Snowflake also beefing up its investment in Amazon web services to $6 billion, which includes its custom chip. And again, the stock is higher.
- [22:11]
Melissa Lee
Mossa Seema. Thank you, Sima Modi, and be sure to tune in to Mad Money tonight. Jim will talk to the CEOs of both Salesforce and Snowflake. It all starts 6pm Eastern Time. You will not want to miss this. It's an interesting contrast in terms of how the stocks are performing, what they've said and the fact that CRM is legacy enterprise software. Snowflake is not. Investors are willing to see sort of a narrative change in Snowflake.
- [22:36]
Guy Adami
Yeah, I mean, I almost feel bad for Marc Benioff. I mean, he's been talking about agents for like a long time. And you would have thought they'd be in the catbird seat to do this and kind of fend off, you know, some of these upstarts and some of these, you know, lms that have just come in harder, these frontier labs. And you know, it's just not, the investors are not buying it. I mean, we talked about this last week and we saw workday up, you know, 8, 9% in the aftermarket. Filled in that gap almost, you know, immediately. Zoom did the same thing.
- [22:59]
Melissa Lee
Now.
- [22:59]
Guy Adami
Yes, Service did not bid for them right now. And when you see all the money where it's flowing, it's like people are not willing to take a shot. Now whatever's going on in Snowflake just seems a bit unnatural. But, you know, short squeeze, I don't know.
- [23:11]
Melissa Lee
It is, yeah, 6% short.
- [23:13]
Tim Seymour
I just think the most important thing about Snowflake is that they, they increased their fiscal 27 guidance by 4% from February. This is supposed to be the time, time when software companies are getting their lunch, their lunch taken, eaten, all of those things. And in fact, if anything, they're, they're reasserting their place here essentially with the same clients and who are probably have
- [23:32]
Karen Feiderman
more demand and new clients, a lot of new clients at Snowflake and bigger clients as well. So that's a pretty good momentum, but the magnitude of the move is surprising.
- [23:41]
Tim Seymour
Guy, are you okay? Are you sweating?
- [23:43]
Karen Feiderman
What's the matter?
- [23:46]
Dan Nathan
Can we go close up on my.
- [23:47]
Tim Seymour
I don't know.
- [23:48]
Guy Adami
You schmitzing?
- [23:48]
Karen Feiderman
What are you doing?
- [23:49]
Tim Seymour
Yeah, you got your pits going.
- [23:51]
Guy Adami
No, I don't have pits.
- [23:53]
Dan Nathan
Those are not my pits. Tim, are you familiar with what armpits are? I mean, my shoulder. I was congratulating a colleague on something which I won't get into detail, and I probably got his or her makeup on my shoulder. In our embrace and in the break, I asked Miles to get it off, and Miles screwed it up as usual.
- [24:14]
Tim Seymour
Why did he screw it up?
- [24:14]
Dan Nathan
Well, because he just didn't do it correctly. As the saying goes, if you want something done, do it yourself. By the way, once again, an animal reference catbird seat by Daniel.
- [24:24]
Melissa Lee
Yes, that's why you're grimacing like a Cheshire cat.
- [24:28]
Dan Nathan
No, I love Miles. We love Miles. It wasn't Miles. Well, it was my fault, but thanks for pointing it out.
- [24:32]
Tim Seymour
Well, I think the folks at home, probably in the A block, realize you
- [24:35]
Melissa Lee
were soiled and now he's wet.
- [24:40]
Guy Adami
But by the way, with the sales force, you know, the guidance on Q2 was down a little bit, but just trust us in the back half of the back half of that.
- [24:49]
Melissa Lee
Yeah, a lot more fast money to come. Here's what's coming up next.
- [24:53]
Fast Money Announcer
Crude getting crushed. Oil prices settling below 90 bucks a barrel for the first time in over a month. What's driving the move lower and when it will translate to prices at the pump next. Plus, time to take a breather. Why one market strategist is keeping cash on the sidelines and why he's finding irony in the market amid geopolitical uncertainty. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this.
- [25:27]
Melissa Lee
My community gives me the confidence to ask myself, what would you like the power to do? So every time I'm on the pitch, I play for more than myself.
- [25:37]
Dan Nathan
Oh, what a tackle from Naomi Girma. Absolutely brilliant.
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- [25:57]
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- [26:31]
Melissa Lee
Look, Daddy.
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- [26:54]
Melissa Lee
Welcome back to Fast Money. Oil prices tumbling today and hopes of progress in US Negotiations with Iran. WTI crude settling below dollar a barrel, its lowest price in over a month. Brent was below $95. Secretary of State Marco Rubio saying during the White House Cabinet meeting today that the US Will give Iran talks, quote, every chance to succeed as the war close in on 90 days. And Karen, you made some trades in oil today.
- [27:18]
Karen Feiderman
I did actually, which I've been wanting to I have been adding, added from lower, added from higher because it was higher yesterday. So that sort of means you went home long as if you bought it there. But I added some today. I think oil could come in more for sure, but I really like the underpinnings of the energy trade.
- [27:34]
Dan Nathan
For some reason the OIH decided to carry today. The downside, I think it's an opportunity Schlumberger sold off but not nearly commensurate. I think with the broader, with the broader etf. I'm with Karen on this. I think you got to still stay long these oil names.
- [27:48]
Tim Seymour
I'm Long slb. We can't call it slumber anymore but we were doing wrong and and active rig counts jumped last week really for the first time since the war began. So, so I think you're seeing a delayed response and what we all have said and pointed out is that the need to restock and build and remove energy insecurity by in other words, by doing everything you can to find new places and drill is great for Schlumberger slb.
- [28:11]
Melissa Lee
Are you surprised though that there wasn't more market reaction to oil prices moving to the lowest level stock market reaction?
- [28:18]
Karen Feiderman
Yeah, I mean I thought, you know, yesterday. Well, yeah, yeah, I guess that's I thought bonds would be move more.
- [28:23]
Melissa Lee
Yeah.
- [28:25]
Karen Feiderman
So that was a little bit surprising. But I think.
- [28:28]
Dan Nathan
Well, we'll see.
- [28:28]
Karen Feiderman
We have some PPI data coming up
- [28:30]
Melissa Lee
as well PC tomorrow. Tomorrow, yeah.
- [28:33]
Karen Feiderman
Right. So that's been weighing on the market guy.
- [28:35]
Tim Seymour
You look like you've cleaned yourself up a little bit.
- [28:37]
Dan Nathan
Tried. That's what happens. I didn't, I wasn't able to get your blow dryer in the brake.
- [28:43]
Tim Seymour
Well, it's in the, it's in the room if you need it. It's a part of the anyway.
- [28:47]
Melissa Lee
Coming up, building a cash buffer. How a top market strategist is positioning amid all the uncertainty and why he says there is there's irony playing out in the market right now. The details when Fast Money returns.
- [29:03]
Fast Money Announcer
Missed a moment of fast Catch us anytime on the go Follow the Fast Money podcast. We're back right after this.
- [29:14]
Melissa Lee
Welcome back to FAST money. Stocks in and out of positive territory today, but major indices all setting record closes today. The dow jumping nearly 200 points. The S and P and NASDAQ both fractionally higher. Cybersecurity firms Zscaler dropping more than 31% despite beating top and bottom line expectations in its report last night. The company giving weak guidance and striking a cautious tone around customer acquisition. And check out Cathie Wood's Ark ETF over the past month up less than 2% underperforming the broader tech space. The Nasdaq up more than 7% in that time frame. She recently bought $32 million worth of newly public Cerebra stock. And some more after hours action. HP topping expectations synopsis basis beating top and bottom line estimates. Marvell doing the same hiking Q2 earnings and revenue guidance. That stock up 12%. FedEx Freight, which will be spun off from parent company FedEx next Tuesday will join the S&P 500 when it starts trading. It's replacing EPAM Systems which is moving to the small cap index. We're seeing a slight pop there. FedEx Freight will also join the Dow Transports replacing American Airlines. Well, investors may want to consider increasing their exposure to cash for with stocks at all time highs. It's an asset Mike Antopoulos likes right now. He is the head of multiasset Macro Investing at Janice Henderson Investors. Michael, great to see you.
- [30:29]
Michael Kantopoulos
Nice to see you as well.
- [30:30]
Melissa Lee
How high are you in cash and how unusual is that for you?
- [30:34]
Michael Kantopoulos
We're about 7% cash across our portfolios. That's a little unusual for us. I mean, equity markets tend to go up, as we all know, and so you don't want to be underinvested per se. But I think during these times where you have so much uncertainty around what's going on with Iran, what's going on with with inflation, the potential for rate volatility, which I think could be quite, quite large I don't think you want to be overexposed either to the equity market here. And so what we did in our portfolios is we raised cash, but we didn't change the overall structure of the portfolio. So it's not like we added defensive stocks. We didn't go and buy Staples Health care and utilities. We actually still continue to have a cyclical bent, but we just raised cash to have on the sidelines in case there's a drop in the market, to be a little bit more optimistic, opportunistic.
- [31:17]
Melissa Lee
In terms of how we should think, though, I understand that the overall construction remains the same, but it's got to come from somewhere. So walk us through where it comes from.
- [31:26]
Michael Kantopoulos
It does have to come through somewhere. So the way that our portfolio is currently positioned is we're overweight international markets, underweight. The US we brought down basically Europe and Japan, but we also brought down value in the US And I think that's the right call. The expression is again more about volatility and being prepared for higher volatility than it is about crawling into the fetal position under your desk and being scared of what's out there. The macro environment is actually quite strong. So I think this is more about waiting out the storm.
- [31:58]
Dan Nathan
What does bond volatility look like? We got up north of 460. The market did not like that. What does it look like to you?
- [32:05]
Michael Kantopoulos
You know, Guy, I've been saying this for a while as a view, I think the 10 year is going higher. I think that you could see real serious gaps in the 10. And I think you could easily approach 5%. And you know, if, if, if Chair Warsh were to somehow convince the committee, which I don't think he'll do in fairness, but if you were to convince the committee to cut rates, I think you could gap very quickly to five and a half percent. I mean, the economy, strong earnings growth we're seeing is fantastic. There's no lack of credit availability, which is the whole point of tight monetary policy. And so, so if the Fed cuts rates into inflation that's going up and growth that's strong, then we're going to see five plus on the ten year. If they keep where they are or even hike, which they could do, I think you're going to be rangebound between that 44 and 46 range.
- [32:52]
Karen Feiderman
So does any of your cash allocation is any of that because cash is actually paying something right now as opposed to just a, you know, dry powder 100%?
- [33:01]
Michael Kantopoulos
I mean, you know, the calculus was we can sit there and earn 5% or roughly 5% in cash and you know again have that, that dry powder and put it to work at some point or, or we can own a, you know, a highly volatile equity market or a fixed income market that could see some price loss as rates go higher. And so absolutely Karen, the 5% or 4 and a half percent cash level is, is definitely reasonably attractive here.
- [33:24]
Guy Adami
Like we just mentioned that you're moving more towards a cyclical sort of bent. What does that look like to you? Like what would be one sector that would start to like a bit more cyclical, less secular that you should like we should be keeping an eye on.
- [33:36]
Michael Kantopoulos
So we've liked industrials for a little bit. You know if you actually look over the last 10 years even small and mid cap American industrial companies have outperformed the nasdaq which is a pretty crazy stat. So we continue to like industrials. It's been somewhat of a mainstay in our portfolios when we think, you know, there's some cyclicality and some positive momentum and in earnings materials is another space. We've been overweight emerging markets China this year which has obviously been a nice call. Now you got a little bit of that sort of chip momentum in play there. But the actual underlying fundamentals for emerging markets excluding China are quite good. And so those are three cyclical areas of the world and at a sector level that we like.
- [34:20]
Tim Seymour
I like him too. I still don't believe em can do what it's doing if rates go higher and that is something your concern and, and what I hear you haven't really quite said it but it's asymmetric. Asymmetric risk in, in. In the rates market here.
- [34:34]
Michael Kantopoulos
No, I do think it's asymmetric risk. I think there's a, there's a world in which M does okay with, with higher rates. I mean it's obviously done well from as rates have gone from about 390 to 460 and emerging markets ex China has done quite well. So I think there is a world in which it does well. Remember much of emerging markets is exposed to the commodity complex certainly certainly the producers from Latam and so, so if those rates are being driven by higher commodity prices, I mean you could see that feed through and see some positive catalyst for emerging markets or parts of emerging markets.
- [35:03]
Tim Seymour
Yep.
- [35:04]
Melissa Lee
Michael, always great to see you. Thank you.
- [35:05]
Michael Kantopoulos
Thank you.
- [35:06]
Melissa Lee
Michael Kantopoulos, do you agree with this notion that we are at a point now where you should pare back risk?
- [35:12]
Dan Nathan
I'm not. Well, I've thought that for a while it's been wrong. But I think in terms of his timing, I think it's probably right. And his concern about the bond market, the concerns that I share and I think the worst, if you want rates to go lower, the last thing you want is for the Fed to cut rates, which by the way, I don't think they're going to do here.
- [35:27]
Karen Feiderman
Well, you know, with the VIX here that's. It seems like it's too rosy for me. So I'm always long but I do want to have some protection. So that's been basically selling some calls against things.
- [35:40]
Tim Seymour
Implied volume in the treasury market is back to pre war levels and you can't tell me we should be there. I mean that's the asymmetric side of, of this. I don't know that we have to go running to 5% on the 10 year. Not saying that, but risk reward.
- [35:54]
Guy Adami
Agree.
- [35:54]
Tim Seymour
I think it's pricey.
- [35:56]
Guy Adami
It's pretty amazing though. Like think about how many things have been thrown at the market. Guy was just talking about 4, 7 in the 10 year. Now it's 4, 4, 5 or whatever it is. I mean like the market doesn't like the stock market. Investors just don't care. I mean there's nothing that you can throw at. Nothing geopolitical, you know, and you know, when you're looking at 25% year over year earnings growth, I don't think anybody was coming in and thinking that, you know, and so the idea that you would cut interest rates into that sounds absolutely ludicrous because the market hasn't cared with Fed funds that, you know, four and a half, it didn't care at five and a half.
- [36:25]
Karen Feiderman
Although it is cheaper to fund the debt.
- [36:27]
Tim Seymour
Yeah, we've got inflation like we haven't had since, since late 2022.
- [36:32]
Guy Adami
Really.
- [36:32]
Tim Seymour
I mean, and again, the numbers don't print that, but it's in the pipeline. But some of the asset prices and some of what we're seeing going on in private markets and in. We talked about sports teams last night. I mean you can't tell me this isn't a world where I think, I think the Fed could go and all would be fine. And I mean higher.
- [36:50]
Melissa Lee
We have a news alert here on Dell that we want to get to. Shares are higher after the Pentagon announced a $9.7 billion deal with the company to supply software to the military. CEO Michael Dell pledged more than $6 billion last year to fund Trump accounts. Dell reports earnings after the bell tomorrow. Shares close at a record today they are higher by about 3% in the after recession. You're a shareholder?
- [37:13]
Karen Feiderman
I am. Dell is now through Dell's trajectory, my biggest position which wasn't what I thought it would be at the beginning of the year. So it's 360, 315 and change in the aftermarket now. I guess that's not shocking to anyone. They are tight. Dell and the Trump administration clearly. Yeah.
- [37:33]
Tim Seymour
Good for you for holding on. One of the hardest things to do is to is to hold on to your winners customers and people tend to sell them too soon.
- [37:40]
Karen Feiderman
I've sold calls against it. Any call I did sell wasn't great.
- [37:44]
Melissa Lee
Far will be less great coming up. Sweetening the deal the CEO of Cygnos joins us next to discuss the case for glucose monitoring to boost weight loss and how the health tech startups freshly announced funding round could strengthen its role in the booming obesity management market. More Fast Money right after this. Welcome back to Fast Money. Health Tech startup signos announcing a $20 million funding round today as the AI powered glucose monitoring platform pushes deeper into the red hot obesity market. The deal, backed by Google Ventures, Dexcom and Blue Cross Blue Shield of Alabama, also includes a distribution deal to put Cygnos subscription plans on Dexcom's direct to consumer site. Here on set for more is Cygnus CEO Sharon Feladgar Mercer. Sherem, great to have you with us.
- [38:30]
Sharon Feladgar Mercer
Thank you for having me on.
- [38:31]
Melissa Lee
What does the money allow you to do at this point?
- [38:33]
Sharon Feladgar Mercer
It allows us to start to really expand this and focus on how do we help our members across three different paradigms. We have the first one which is Cygnos is our core audience for people that don't necessarily need to be on a GLP1 or don't want to be. And then we have the second one which is Psygnos, GLP1 and Cygnos. This is for the fact that the number of Americans that are getting on a GLP1 has doubled from 6 to 12% just in the last 18 months. In the last 12 months. And I think the reality here is that you can now see the impact of your behavior, see the impact of your exercise, of your diet and of your GLP1 on your glucose and taking that and how we help you optimize that. And then the third one is how do we help with people that are getting off the GLP1? There's 15,000 people getting off the GLP1 every day and the latest stats are showing within 12 months we're gaining all the weight back we created the Cygnos GLP1 graduation program to help people when they're ready and make sure they have the diet, the exercise, and changes to maintain that weight.
- [39:28]
Melissa Lee
In case viewers didn't see you the first time on Fast Money, it's actually a device, and you put it in your arm. They're like little needles that actually read your glucose real time. And you can see everything sort of on a dashboard, on your phone or computer. It's an app, and it tells you when your glucose is. Is spiking, when you're not, you've logged what you eat, etc. I'm curious, though, because there is a cost involved. It's a monthly subscription or an annual subscription. And how that has been shaped, if anything, by the lower cost of GLP1s now, I mean, it costs very little to be on a GLP1 pill, for instance, every month. So are you finding that consumers are comparing, you know, do I pay for this or do I pay for this and I can get a GLP1 pill for this much a month instead of paying for a Cigna subscription, which requires a lot more work?
- [40:17]
Sharon Feladgar Mercer
Yeah, no, I think there's a lot of both. Opportunity. But also, as people look at this, they think, what is right for me? Some people don't want to be on a medication, whether it's a pill or whether it's an injectable. And in that scenario, it's how can we help keep them where they are? And then others think, hey, if I'm going to combine this together, what is the most effective way to ensure that I'm successful on my weight journey? And I think the struggle we face with 75% of Americans that are overweight or obese is the fact that a lot of us have lost a few pounds here or there, but we've struggled to keep it off. So I think both parts of that weight management journey are a struggle.
- [40:49]
Dan Nathan
Talk about the novelty aspect. It's great for the first couple of weeks, couple of months. Do people stay with it, or is there a waning period where. And is there a next gen device where it's maybe not as intrusive?
- [41:00]
Sharon Feladgar Mercer
Yeah, no. What's really interesting here is we see the typical customer arc when they come on the solution they have within the first week, three or four aha moments. They have the salad at the restaurant next door and they don't realize it has as much sugar as four Oreos in it from the salad dressing. And they're starting to put that together and realize this is what's affecting me. I don't see the results until I get on the scale. And that's a lagging indicator. That's usually one, two, three weeks away. How do we help you today in anticipation of you're on the right path or we need to adjust slightly. And that's where I think this is really exciting for meeting people where they are at the right time and giving them the toolkit that has an existed. Historically, you don't drive your car without looking at the dashboard and figuring out the signals you see. We want to help you on that journey.
- [41:42]
Tim Seymour
What about your dashboard or your technology or your hardware? It gives you a competitive moat. Seems to me there's. There's a lot of good technology out there. You have incredible partners, by the way, and your position, I think may have something to do with it. But what's the answer there?
- [41:56]
Sharon Feladgar Mercer
Yeah, I think the key really is not how do we just give someone an AI coach. It's how do we build the AI into the user experience so that the more you use our system, the more successful you are on our weight journey. And that's what we see. I wish, frankly, every app I used on my phone did that. I'd be thrilled to use my phone more often. And I think for us taking that technology and making it feel like you don't need a PhD in statistics to figure out all of this data that you have. For example, we give you a wait signal that incorporates all this information and helps you decide and figure out are you on the right path before you see it show up on the scale.
- [42:28]
Melissa Lee
Shahram, great to have you back. Good to see you. Keep us posted.
- [42:31]
Sharon Feladgar Mercer
I appreciate it.
- [42:32]
Melissa Lee
All right, Karen, what do you make of. I mean, it's an interesting device in this sort of space which is really focused on pharmaceuticals.
- [42:39]
Karen Feiderman
Well, as someone who's very connected on my charging, my aura ring right now, and I got eight way and all the kinds of things. I mean, people like the data. Sometimes, though, I don't know. How much data do we all want to have?
- [42:54]
Melissa Lee
Yeah, it's overwhelming.
- [42:56]
Tim Seymour
Every morning on the way to school, my son asked me as if to show off, dad, what was your sleep score last night? I don't have a good sleep score. And so maybe too much data.
- [43:07]
Melissa Lee
Coming up, what is driving auto stocks? Shares of GM and Ford are speeding higher today. How are traders are steering into the group more fast Money into. Welcome back to Fast Money. The automakers are revving up again today. General Motors and Ford have both rallied double digits in just one week. With Ford Hitting its highest in almost four years. Today's gains spurred by a report that both companies want preliminary approval for industrial bank charters from the fdic. That's according to the New York Times. This is sort of an interesting one.
- [43:46]
Tim Seymour
Well, it's funny because. And Dan brought up maybe the lack of drag going on in the finance world. There's. There's been a lot of nice drag if you're an automaker. Everything from emissions to what's going on in the broadening of their businesses and, and where they're actually expanding into ancillary businesses. So it gets back to valuation and free cash flow. This is an interesting concept, but you know, GM right now, even based upon the numbers we have in the move in the stock, even after today's move is trading south of seven times forward, and that's very attractive for a company
- [44:15]
Dan Nathan
that's actually executing gm. It's still the place to be. Tim and Karen have talked about it. Good for Ford, by the way, for figuring something out. But in the game of would you rather. I think it's still General Motors over letter F?
- [44:25]
Melissa Lee
I mean, there's also the undercurrent of their now energy plays in terms of Ford energy and its use of batteries and also gm, you know, developing a battery for the use of Moon rovers, basically. I mean, so this is an interesting sort of twist also for these automakers.
- [44:40]
Karen Feiderman
Yeah, these. So one of the things I was thinking about is Silverado and how, how great those margins are and how, how vulnerable they may be. But I actually thinking with all of the infrastructure build, we'll continue to see some strength in Silverados for a little while.
- [44:59]
Guy Adami
Dan.
- [44:59]
Melissa Lee
I always look over to Dan to see if he wants to. Oh, what is that noise? Is that. Do you have a hair dryer?
- [45:07]
Guy Adami
Dryer guy can't hear you.
- [45:10]
Dan Nathan
Thank you, Miles.
- [45:12]
Melissa Lee
Well, it's now dry.
- [45:13]
Tim Seymour
Still in my hair dryer. Take it easy, take it easy.
- [45:17]
Dan Nathan
Amazing the way.
- [45:17]
Guy Adami
But you guys don't find it interesting that GM and Ford can't make electric cars, but they can make energy packs and things that are going to. By the way, Jim Farley. Yes, Georgetown.
- [45:32]
Jamie Dimon
Georgetown.
- [45:33]
Guy Adami
Spoke at Georgetown's graduation last week.
- [45:35]
Karen Feiderman
Nice.
- [45:36]
Guy Adami
He was great. All right, just saying.
- [45:38]
Melissa Lee
Up next, go Hoyas. Final traits, Final trade.
- [45:58]
Tim Seymour
Tim, I hope you didn't blow a fuse on my baby Bliss hair dryer. Gm.
- [46:05]
Melissa Lee
Buy it, Karen.
- [46:07]
Karen Feiderman
Gotta zig when the market zags. And buying some xle.
- [46:12]
Guy Adami
Yeah, you know what guy always says bulls make money, bears make money, pigs get slaughtered.
- [46:19]
Karen Feiderman
Back to the animal house.
- [46:21]
Guy Adami
Don't chase the smh. You don't chase the smh.
- [46:23]
Melissa Lee
Dan Can Guy can we level with America about the hair dryer?
- [46:29]
Dan Nathan
I did not actually plug it in. I had a hair dryer application sound that I played and it went through
- [46:35]
Tim Seymour
my microphone and it's not my hair dryer by the way.
- [46:37]
Michael Kantopoulos
Oh really?
- [46:38]
Dan Nathan
He has a better one.
- [46:39]
Melissa Lee
$10 much bigger. Mad money's up next.
- [46:45]
Fast Money Disclaimer Narrator
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its 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 GIGO presents a
- [47:17]
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Guy Adami
It feels good when the story ends with savings.
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Tim Seymour
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