← CNBC's "Fast Money"
CNBC's "Fast Money"
Micron Reports, Fed Holds Rates… And The Private Credit Ripple Effects 3/18/26
00:43:21
Micron shares on the move after earnings, and we break down what the results and guidance mean for the AI memory trade with S&P Global’s Melissa Otto. Plus, market reaction to the latest Fed rate decision, private-credit stress spills into consumer loans, and a spotlight on Josh D’Amaro’s first day as Disney CEO. Fast Money Disclaimer
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B
Live from the NASDAQ Marketsite in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. Micron on the move. Shares are down about 1%, 2% right now as the company reported revenues that nearly tripled and hike its dividend by 30%. What are investors reading to the numbers? We'll find out. And the Fed in focus. The central bank holding rates steady but will hot inflation numbers change its course for the rest of the year? What Jerome Powell had to say as the end of his tenure at the top draws near. Plus, Brent crude settles at nearly four year highs. Disney's new CEO headlines a company shareholder meeting. And Macy's big day. What the department store had to say that had investors buying in today. Whether the rally can hold. I'm Melissa Lee, come to you live from studio. Be at the nasdaq. On the desk tonight, Tim Seymour, Dan Nathan, Guy Adami and Michael Kantopoulos, deputy chief investment officer at Richard Bernstein Advisors. Welcome, Michael. And we'll get to the action in Micron shortly. But we do want to start off with today's Fed decision. Policymakers holding rates steady as expected, maintaining the outlook for one cut this year despite the recent surge in oil prices. Stocks closing at session lows. The S and P and Nasdaq each off by more than a percent. While the Dow led to losses shedding over 750 points for its worst day in almost a month. The index closing below its 200 day moving average for the first time since July. Treasuries meanwhile, weakened across the curve. The benchmark 10 year yield adding 6 basis points. The 2 year hit its highest since August. For more on all this, let's turn to Steve Liesman in Washington. Steve? Well, hawkish today, huh?
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C
An eventful press conference and statement. Fed officials leaving interest rates unchanged at their March meeting, the range of three and a half to 375, saying in their statement that developments in the Middle east had increased uncertainty for the outlook for the US Economy. But Fed Chair Powell in his press conference sounded a somewhat hawkish tone by suggesting that the Fed might be reluctant to cut in the future because of inflation now running above target and continued price increase from tariffs.
- [02:55]
D
It's one of those things where it's, it's, it's a repeated set of things and you worry that that's the kind of thing that can, you know, can cause trouble for inflation expectations. And, and so we worry a lot about that and we're, you know, we are very strongly committed to, to doing what it takes to keep inflation expectations anchored at 2%.
- [03:17]
C
To be sure, the Fed chair, in his penultimate meeting as chair, was anything but definitive about how the Fed would react to the historic rise in oil prices. He made clear that there's risk on both sides of the mandate with the potential for inflation to rise and or growth to weaken. The Fed chair adding he intends to stay on as a Fed governor after his term as chair ends May 15, at least while he's still being criminally investigated.
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D
I have no intention of leaving the board until the investigation is well and truly over with transparency and finality.
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C
He said he had not made up his mind if he would stay on as governor after his term and the investigation is over. Melissa. I didn't talk about the forecast because the chair himself said there's so much uncertainty that they were just kind of placeholders.
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B
Yeah, for sure, Steve. Going back to inflation, though, I mean, in his forecast, it sounds like, it sounds like overall the risks are to the upside when it comes to inflation remaining high. Because the also mentioned that, you know, back when, when we had supply chain shocks from COVID after Covid, you know, we thought inflation would be transitory. It wasn't as transitory as we thought it would be. It was transitory, but it lasted longer. So it seemed like there's an acknowledgement that even though these are, these are shocks and should traditionally be looked through, that they could actually persist for much longer than we think.
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C
Yeah, Melissa, you raised small kids. So did I. That's how you learn not to touch a hot stove. Right. You just went through a period where when the inflation stayed around longer. It was transitory. It was around a little bit longer before it cooled off with as a result of massive rate hikes by the Federal Reserve. And so the Fed's just going to be a little shy here this time around. You just look through inflation. You have had a continued run, almost five years of inflation being above target. So I just think the bar is maybe a little bit higher. We have a lot of economists in the Fed survey. We're saying the Fed will focus on weakness. And, and I think that's true if you're talking about definitive weakness of job losses. But I think the story is right now, if it's a close call, that's going to be worried about cutting rates with inflation above target.
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B
Was that your take, Michael?
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E
You know, my take is simply that inflation's here to stay. And I think the Fed is starting to wake up to that. Chair Powell, very on the margins, acknowledged this idea of a series of supply shocks. Steve, I don't remember the exact language that he had mentioned, but it was something to the effect of, you know, some outlets out there, something like that, allude to this. What he's talking about is de globalization. One of the biggest reasons why you had a decline in interest rates over 30 years is because of globalization. And starting with President Trump's first presidency in 2016 and then supercharged by Covid in 2020, we are in a period of deglobalization. And deglobalization is inherently inflationary. And, and I actually think this is on the Fed's radar. I think they're waking up to it core pce, which is what the Fed cares about. Bottom April of last year, you know, you got the pie numbers today. War is inherently inflationary. Inflation is not going down. And I think the Fed is probably going to be on hold this year at the best case scenario. And I think they'll start talking hikes at some point.
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C
Melissa, can I, can I just have a quick word on that, which I think is super important because if you think about what globalization means when the Fed thinks about supply and demand out there, if you have a rise in demand in a globalized world, the entire world is around to supply what needs to be supplied. We found that in the pandemic when you had the supply disruptions, that that could lead to inflation. And you may be on the cusp of another situation here where globalized world creates the issue where the world is not around to supply what needs to be supplied in the face of higher demand here in the United States.
- [06:55]
B
I thought the other thing that was interesting in the press conference, Steve, was the, the discussion about productivity moving higher within the GDP and how, you know, that is probably due to AI, but too early to call at this point. We spoke to Alan Blinder in the last hour and he said it's not going to be big, but it's something on an ongoing basis in terms of the, the continued benefits that we will see.
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C
Yeah. And we had a nice conversation with Professor Jeremy Siegel who pointed out that the Fed had raised the long run potential growth from 1.8 to 2%. Doesn't mean, doesn't sound like a lot, but point two over a long period of time can add up and it suggests that there is some confidence. You're right to say it's not necessarily AI. What Powell pointed out and what is clear in the data is that the increase in productivity, the sustained increase productivity began several years ago and may have come from the pandemic. I like to think about the idea that all of a sudden the workforce became something you get all over the, because of remote work and right sizing and lots of things that happened in the pandemic that I think were positive. Whatever happened, the productivity did run. It began, began running hotter in the wake of the pandemic and it has remained there. And the Fed seems to be incorporating that into their long run view and I think investors probably do too.
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F
Steve, how, how short of a honeymoon period do you think Kevin Warsh is going to have given what he's about to walk into?
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C
I think in Guy, inherent in your question is the idea that it's will not, he won't even have a honeymoon. Right. If he comes in and inflation is running above target, if inflation expectations are hot, if the idea of whether or not, pardon me, you have inflation from a headline bleeding into the core, there will be no honeymoon. If you suggest that a honeymoon is the ability to cut rates without being too much scrutiny, I don't think that's going to happen. And Guy, it is fascinating the way the market is trading. Essentially, if you look at futures markets, they do not see the new Fed chair acting until December. So he sits there, he does nothing. When he comes in in June, nothing in July, goes to Jackson Hole, comes back, doesn't cut rates in September, maybe in October, but more likely in December. That's the market's bet right now. Guy.
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G
Steve, put your, excuse me, your economist hat on. You just put your Fed's hat on. And if we have $110 oil through to June, where is the Fed on rate hikes in 26.
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C
So that's why I asked that seemingly geekish question about the staff. What the staff has said in the past, which is apparently what the staff has said, is that you have this increase in oil prices which creates a drag on consumption, but that ends up over in higher production, which kind of offsets it from a growth standpoint. Right. So by the way, Tim, I'm going to throw this out to you, but I think one of the things that we're learning here is that there's two basins, there's an Atlantic Basin and a Pacific Basin when it comes to oil. So, and as you notice, Brent is trying is trading higher than wti. We have an ability in this country to respond to shortages or over a longer period to respond to deficits. That may not be as true in the Pacific Basin. You could have this widening gap. So, yeah, $100 oil, I think is okay. I think it's $150 oil. That's the problem. And I will say I just talked to John Kilduff, one of my favorite oil experts. He says this damp strait. Did I say that dam straight better be open by April 1st or that's when you're going to have a quantum leap again in crude prices. Right now people are sort of acting in a way that it's going to open again and then we'll have another conversation about what it means to have really surging crude prices on the other side if this thing lasts longer.
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B
Steve, it's always great to speak with you. Thank you.
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C
Pleasure.
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B
Steve Liesman. So April 1st is the Magic number on the equity side. You know, two to three weeks in terms of the conflict, having to see an end in sight in order for us to sort of move on with our lives in terms of the market, move higher. I mean, it's all coming down here to the next couple of weeks here.
- [10:57]
D
Yeah, I think what was clear listening to that presser is there's a high level of uncertainty. We talk about it all the time. And so really you got to think about, obviously low end earners are going to have a hard time with this. They already are. And they were already in somewhat of a difficult spot before we had this rise in oil. And then it comes through in a whole host of other things. You keep people talking about fertilizers. If farmers have to pay twice as much as they were paying a couple of months ago for fertilizer, I mean, sooner or later that's going to work its way back into food costs that we've already seen go up dramatically. And the other thing is, and maybe Michael has some thoughts. I mean the cumulative nature of inflation over the last five years is massive. And it doesn't really matter if it gets down to the Fed's 2% target, whether it's 2.4%, whether it works to 2.9%. I mean we're in a spot right here in the economy economy. And you know Joe Lavorna was on one of the shows this afternoon. I'm listening to him and he's saying the fundamentals of the economy are sound. I mean I think they're like the opposite of that. If anything they're very fragile, you know. And if you just see the sort of shocks that we have potentially and the uncertainty that we have, I just don't know how anybody can go out and talk about how sound the economy is right here.
- [12:04]
E
So I think there's two things. One is the economy and one what's going on with profits and the stock market. From an economic perspective, I agree with you. I think there's a lot of fractioning in the economy. You obviously have a case shaped economy. I mean how many times can we say that we see stress in private credit? You see stress all over really. Right. On the other hand, you just had near 17% earnings growth in Q4. And so corporations are actually doing quite well and in fact you're starting to see earnings growth start to broaden or at least you did in the beginning of this year. And so it's a little bit of a strange dynamic. You know, the rich are getting richer, the poor are getting more and more hurt. Higher oil prices is only going to exacerbate that because either you're going to be able to afford it or you're going to get really, really hurt. And so I think there's just going to be massive dispersion which creates opportunity from a trading perspective.
- [12:53]
G
I agree with that. I think Dan's bringing up a good point though. I mean it may be that the year over year numbers, the comps get easier for inflation but you can't tell me that people aren't absolutely worn down over three years of this. And I would get back to a place where say it's $65 WTI, our blend, our basin is actually something that was a major tailwind in, in hindsight. So it may not have felt that way when we were going there. But part of this EPS growth is a lower cost of energy. You can't tell me it doesn't feed into everything. I think we're going to look back at consumption and trends. When the K shaped consumer, the one on the lower end had $65 gas or oil leading into gas prices and energy prices. I think that's as good as it gets for a long time and I think the spending attached to that, especially for people like Wal Mart is something that you have to watch.
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F
The test is going to come in the form now you have crude back I think the last I looked and you had pip on in your prior show closing bell overtime talking about how TI now is back above 100. So I mean the administration clearly, I mean that's got to be a magic number. So with the stock market.
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G
Sorry, well that's.
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F
No, but that's.
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You can roll back tariffs all you want. You can't roll back.
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That's my ran Zack, for my point
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F
what are they going to be able to say say to sort of assuage the concerns of market participants? They're running out of bullets on that front.
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D
I just, you know, listen, I mean to call Joe out, I mean his economist is a brilliant guy, you know that sort of thing I just like that was the one thing that I kind of took away from listening right after the presser. It just seemed like it was about as clear as mud. The one thing I'll say about that 17%, you know, earnings growth that we're seeing and yes it is broadening out but it's still really, really focused on those top 20 names. And you know, when you think about what's gone on over the last couple of years or so, all of a sudden we're going to talk about Micron. I think about the pricing power this company has. Think about what that means for margins of the companies that have to buy those products. And I think we're seeing that across the board especially if you do not see the slowdown in infrastructure spend for data centers. I mean the supply demand dynamics are not going to change anytime soon. The only thing that changes is less demand and who knows if that's coming because you could have been or me. I would calling for a slowdown in a while and it's only accelerating when you have like an Amazon basically moving their capex up what was it, 120 to 200 billion this year, that sort of thing thing. But that will be inflationary for a whole host of other things. Energy, not you know, like, like, like think about that. We're talking about price at the pump right now. Think about what's going on with utilities to heat your home and all that sort of stuff. So they're getting, you know, consumers are getting a lot of different ways right now.
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B
All right, let's get to Micro now. The stock is down by about 1 1/2% after the chip maker beat street expectations on the top and the bottom line revenue coming in nearly $24 billion versus 8 billion a year ago. It also gave strong guidance for the current quarter. CNBC's MacKenzie Sagar got all the details.
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Hey Mel. A staggering beat across the board for Micron on what were already considered to be extremely aggressive analyst forecasts. And the memory chip maker reporting revenue that nearly tripled in the second quarter. And then on the call just now, CEO Sanjay Marotra saying that Capex is going to be raised to 25 billion for this fiscal year and says that it's expected to rise by another $10 billion plus in 2027. CFO Mark Murphy also weighing in adding the two second quarter gross margin nearly doubled due to higher pricing. The CFO adding that they expect higher prices and lower costs to contribute to gross margin expansion in Q3, which is especially noteworthy given that gross margins already more than doubled to over 74% in Q2. Also hearing on the call that they expect to increase their fiscal 2027 OPEX as they ramp R and D investments in support of an unprecedented set of long term opportunities and memory and storage. That's how they put it to the story on the call right now is all about ramping production shares though you said it now close to 2% lower. We'll hear from CEO Sanjay Marotra tomorrow on Squawk on the street. So be sure to listen in for that.
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B
Mac. Thanks. Mackenzie Sagalos. It's different this time around. It is different this time around. It is no longer supply and demand except that they're increasing supply a lot in the second by the second half of 2027. But still, I mean there's a lot of demand for the memory products even beyond the increase in supply.
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G
This is not a demand story question. It's not a demand question. It's a demand story in terms of what's there. But I still think and investors are going to start to look at the Capex spend too. They're going to. These are massive numbers for Micron. This, these are numbers that they've never been involved in either. So I don't know. I mean the price action is fascinating. This is a stock that was, you know, $400 going into last week. It's been the one bright spot in the market where you've made some money and I think it's a very overweight trade. So we'll see where this trades. But there was a lot of news in there that tells you demand is great. We knew that those numbers were about as good as they could get. And this is what the stock's doing.
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B
They were stunning numbers and the gross margin numbers were stunning numbers in terms of how much, the degree to which they beat and yet here we are. But it's up 60% this year. 6, 0.
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F
Yes, it is. The guides. The guide was ridiculous. I mean to Tim's point, I don't. I'm hard pressed to understand how much better it possibly could have been to get the stock to react. So it's all about the reaction of the stock. Right. I mean the quarter is in. The guidance is extraordinary. The reaction at least in the last whatever an hour or so is not that good. Is that going to be a tell? I have no idea. Let's see how it trades tomorrow. But I think what the market is saying right now is we knew these numbers are going to be extraordinary. This might be a buy the room by the into the news, sell the event type of thing.
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D
Yeah. I mean stock rallied 30%. Right. So just think about this. And you know, if you were around for this thing when it was, you know, I think it was up few hundred percent into the kind of top in the dot com sort of thing. Not too dissimilar than what's happened over the last year. This stock lost 90% of value. I'm not saying that's what's going on. But if you asked anybody over the last 20 years who knows the stock, who knows this industry, the subsector, if this would ever be a half a trillion dollar market cap company, you'd be. It'd be really hard to find anybody who could ever see it. This is the 100 year storm for a name like this. And it's a good storm, but it actually has the potential to go the other way too. So I look at this thing, I just don't. Mike, remember what three years ago is that May quarter in 2023. When in video put up a number like this, this stock's up a thousand percent in five years. So it's just a very $65 stock
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G
less than a year ago.
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B
Yeah.
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G
It's now $460 stock.
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B
Yeah. I mean it's. How do you think about all the capex that hinges on the AI story continuing?
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E
Yeah, I mean I think it's obviously a very tricky story to get behind at the moment, especially with higher rates. I mean the whole idea is that this is going to realize cash flow in the future. And so essentially a lot of these stocks are are long term bets and long duration bets if you will within the equity market and that makes it pretty hard to get behind. I mean we've seen this play out many, many times. I would liken it more to the the telecom bubble than the dot com bubble and building out all the infrastructure around the telecom sector in 1999 and 2000. Not to say you can have a global Crossing event and you know they're going to go bust. But Cisco didn't go bust either. Micron and go bust either and you obviously had some pretty big drawdowns going from asset light to asset heavy. Not a selling Micron's case, but just in general is a tough business model to get behind these levels.
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B
Coming up, we're keeping an eye on shares of Micron as its conference call continues. All the headlines from that and what one analyst sees in store for the semi stock. But first, a whole new world for Disney. The media giant starting a new chapter as Bob Iger's replacement steps in what to know about the new CEO and what it could mean for Disney's future. Don't go anywhere. Fast money's back into.
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J
Today, men are struggling with their mental health at some of the highest rates we've ever seen. But most aren't getting the support they need. And that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap, presented by Cigna Healthcare. This season we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts.
- [22:26]
B
Welcome back to Fast Money. Disney shares down about a percent Today the key to the Magic Kingdom officially passed to Josh demaro, who took over from Bob Iger as CEO at today's annual shareholder meeting cnbc. Julie Borson's got the details. Hey Julia.
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L
Hey Melissa. And his first day CEO Josh tomorrow laying out his priorities for the company at Disney's annual shareholder meeting, thanking Bob Iger tomorrow saying, quote, while others in our industry are consolidating just to compete or struggling to be relevant in a fragmented and disrupted world, Disney is in a category of one poised to accelerate into our next era of innovation and growth. Demaro laid out laid out some of his key areas of focus, saying Disney plus will continue to evolve beyond a traditional streaming service to become the digital centerpiece of the company, connecting stories, experiences, games, films and more in new ways. He also pointed to a huge opportunity to grow internationally. And he stressed the importance of embracing new technologies to empower storytellers, but said it would not be at the expense of creative partners or of trust. Now, analysts are hopeful tomorrow will be able to bolster the stock which is flat over the past year. But 85% of analysts have a buy on the stock. The rest have holds no sell ratings.
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B
Melissa Julia, thanks. Julia Boorstin so what do we expect? We can be hopeful, right?
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G
Well, there's no question this is an exciting era of change and he just referred to the next era of growth and innovation. And that's really the question. We all would love to know what it is. We met Josh at a Disney Princess event in New York when the Disney
- [24:00]
B
treasure belongs to the latest cruise ship.
- [24:03]
G
Really exciting. And boy, this is well before, at least outwardly this was a concept of a new CEO was in the market. And he's an impressive guy. He's a guy that actually really does resonate vision and leadership. So as a shareholder of Disney, as someone that has been frustrated by really the lack of catalyst because getting the DTC positive And, and really those early victories they could have are things that we really now need to take it to a free cash flow, a margin dynamic and something that I think is still a little bit of ways away.
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F
I'm just thinking when Tim said Disney Princess, you know, I think of Tim
- [24:38]
G
is, I mean, you know, we'll just
- [24:43]
F
throw this out here because it's worth throwing out. We've had a lot of extraordinary people come through.
- [24:47]
B
Yes.
- [24:48]
F
CNBC's Fast Money, Jason Farkas is one of them. Jason, who may be watching now, invited us all. I did not attend. But you went to this Disney Princess.
- [24:55]
G
We did.
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F
You came back saying that this gentleman was well suited for the seat. Now he's got the role. Now the question you have to ask yourself, do they sandbag, do they kitchen sink the quarter on May 3rd?
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B
Why wouldn't you?
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F
And does that set up for the buying opportunity for the, for the first time in many, many years in Diaz?
- [25:11]
B
Yeah, well, I mean, the consumer has to remain strong, though, in order for this story to work.
- [25:16]
D
I think where he comes from, you know, this is an area that's been strong despite some of the consumer headwinds that we've seen. So again, I think investors, especially after, after getting two bouts of Iger over the last, you know, what is it, 10, 10 years he left, came back
- [25:29]
G
or that sort of thing could send nothing in 10 years.
- [25:31]
D
But yeah, and by the way, that guy is going to go down, I think is one of the best CEOs, despite what's happened with the stock, transformed
- [25:38]
B
all those acquisitions that really, I mean,
- [25:40]
D
I mean, made some of the best media, you know, acquisitions that may ever, you know, happen. So now it is a great opportunity for somebody to kind of pick up the baton and, you know, make Tim some money.
- [25:49]
G
Well, I will say in terms of making money, I still think ESPN is undervalued. And I think that there was a time when people were waiting to see what that spin off would look like and what it would bring them. I don't think it's going anywhere. And I also just think as much as Paramount, Skydance stock has absolutely plummeted since they closed on this deal. I still believe that Disney's properties intrinsically are valued a lot higher today than they were before Warner Brothers was sold off. I mean, it just shows that there is value in some of these properties. And I think Disney doesn't get any credit for that.
- [26:20]
B
Coming up, Micron's conference call about to wrap up. We'll bring you the headlines. What one top analyst says is in store. For the store stock her take on the results and the rest of the semi space. You're watching Fast Money live from the NASDAQ markets at in Times Square back right after this.
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Men are struggling with their mental health at some of the highest rates we've ever seen, but most aren't getting the support they need. And that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap, presented by Cigna Healthcare. This season we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts.
- [27:40]
B
Welcome back to Fast Money. Stocks selling off and closing at the lows of the session after the central bank left rates unchanged and Fed Chair Jerome Powell said inflation isn't coming down as much as hoped. The Dow falling more than 750 points to its lowest close of the year. The S and P Nasdaq both dropping nearly one and a half percent. FedEx on deck to report results after the bell tomorrow. The stock is up more than 21% so far this year. And shares of Lululemon reversing after yesterday's earnings report. The stock initially falling but closing out the day nearly 4% higher. Lulu topping EPS and revenue estimates but giving weaker than expected guidance as tariffs, higher expenses and the proxy battle with founder Chip Wilson weighed on the company. Guy, you pointed out this reversal that we saw.
- [28:20]
F
We talked about it yesterday. We had one of the great retail analysts of all time, Dan Nathan. You recall Dana Telsky. Dana Telsky, yes. And she talked about how, you know what, she was wanting to start to get optimistic on the name. And we talked about the quarter was good and the fact that maybe they were turning the corner and that the stock actually shouldn't have been lower. And here we are today. So I think for a bounce you can still play Lululemon moment.
- [28:41]
B
How are you thinking about FedEx tomorrow? Tim?
- [28:43]
G
I tell you, I think everything this company is Doing right. I know UPS is getting a little more attention in terms of their operational improvements because frankly was off of such a bad base. But FedEx is really clicking along here. I want to hear what their margin profile is. I want to hear what's going on especially in a slightly higher price environment. We're not going to hear from this quarter anything related to the current conflict and what it's mean for, for transportation companies. On some level it's a bit of a headwind. I want to know what's going on with Ground and Express. Those are the places they need to show it.
- [29:11]
B
All right, let's take another check on shares of Micron. They are now down about 3% in the after hours close after hours session lows announcing revenue tripled from a year ago. For more on the quarter S and P Global Visible Alpha's Melissa Otto joins us here on set. She is the firm's head of research. Melissa, great to have you with us.
- [29:26]
M
Thanks for having me here.
- [29:28]
B
Is this just a case of it's everybody expected amazing numbers? I mean these numbers are off the charts.
- [29:34]
M
They're insane. I mean there is probably a bit of sell the news atmosphere around these numbers but the guidance is just off the charts. It blew away cap IQ consensus significantly on top and bottom line. Looking out to next year, I mean these numbers, I mean they just look like they could, we could see very significant upward revisions from the market, especially around the ASP growth. ASP growth coming in mid-60s. Consensus was at 38%. Second half of the year is between 7 and 10%. I mean this is, is just incredible.
- [30:19]
B
Talk us through where the new areas of demand are aside from data center build out inference training. I mean they're talking on the conference call about robotics for instance. Help us understand why this time is different. Because when we hear this time is different. You want to laugh at that, right? I mean it's like it's time to sell. So why is it in your view this time is different?
- [30:41]
M
Right, right, right. No, I mean I remember when the Japanese used to own the space and they don't anymore. It's now a US company and two Korean companies that essentially own the space. Very boom and bust in the past they're adding a ton of capacity. So I mean I think absolutely there's reasons to be concerned. But for right now it seems like all systems are go. I mean we could have said that about Nvidia two years ago. I saw the upward revisions flying two years ago and here we are. It's the same thing.
- [31:19]
B
They are adding capacity though at a pretty, I mean it seems like a lot, right? They just clean room. Clean room capacity from a Taiwanese company yesterday. They're going to build another one on that same site. They're going to open one in the United States. I mean, I think, I don't know what your projection, I don't know what your projection is in terms of increase but Another firm said 20% increase to global capacity by 2H27. That seems like a pretty big increase.
- [31:45]
M
It's possible. We'll see where consensus heads to what the market says.
- [31:50]
F
What's the first sign of the potential turn to the downside? Like what's the one thing we should be watching for?
- [31:56]
M
I think the macro could be a big concern because right now what we see is the capex numbers for the big four hyperscalers is almost $650 billion for this year alone. So if that comes down to five, boom, there's your catalyst.
- [32:16]
G
Yeah, let's, let's talk about what they pointed out. I mean they've said demand stays really tight till the end of 26, but how far out do you need to look and how far in will you price that? Because I think the market is that discounting mechanism we all know. We just heard about this capex number which starts to sound a little scary. So I'm just curious again from measuring out the capex spend against the demand that we know is there now but may actually start to ease in 27 because of all this CapEx.
- [32:44]
M
I mean this is the thing, I mean this is the million dollar question, are we in an AI bubble? I mean I don't see that in the debt numbers as of yet because a lot of this AI demand, data center demand is being driven by the hyperscalers who are funding a large percentage of it with cash flow, not simply with, with big debt. Like we don't, like we, we would have seen in the past where you had like massive speculative debt to equity ratios of like 4 or 5x. There's nothing like that that I'm seeing at the moment now in the private credit markets. Who knows what's going on there? I can't say anything about that. I think there is some, there may be some more speculative activity but I think when we're talking about these core healthy mega cap tech stocks that are driving a lot of this, that seems very much intact and that's driving a lot of the demand.
- [33:42]
B
Right. Melissa, thanks so much for stopping by. Such great energy.
- [33:46]
F
Unbelievable.
- [33:48]
B
Melissa Otto, Easily entertained.
- [33:51]
M
No, I mean Was that whole like dissing me on the In Excess
- [33:57]
B
have in the commercial. The audience has no idea but I will share.
- [34:01]
F
She said that In Excess was the last great rock and roll.
- [34:04]
G
So the question we were asking to Melissa when she got on set, which is what we do to all guests quickly, classic rock and roll and who she thought the last great classic rock band was, she threw In Excess. I gave you a pat on the back of stretch.
- [34:16]
B
Interesting way to go stretch. Melissa, thank you. Our thanks to you for playing our Reindeer Games.
- [34:20]
F
Reindeer games, that's a good point.
- [34:23]
B
In terms of you know, the AI, you know, CapEx expansion it's all being funded by cash and high grade investment quality bonds. So so far bubble.
- [34:31]
E
Yeah, I'm not so sure about that. I'd probably if Melissa was able to stay on a little longer, you know, challenge her a little bit that you know I think we're seeing it in the private credit space clearly particularly among software which is different but even with regards to the hyperscalers you're seeing a lot of debt issuance and the reason is because they can't finance their capex through cash flow. They were doing that when rates were zero and now when rates are not 04 plus percent they're going to the debt markets. Why? Because they have so much capex they can't do it through cash flow. So yes, there's still investment grade companies my worried about, you know, Amazon or Oracle's or those CBS markets a little worried about Oracle's debt. But you were not worried about Oracle's and Amazon's and and met as debt to the point where they're going to default. But in terms of, you know, is there some excess there? I think without a doubt there is.
- [35:18]
D
Well you should be worried about when Open Air has to start raising debt. I mean if they can't go public they just raised $110, you know, $110 billion. They're not going to have it on their balance sheet you know, right away. And so you know this is one of those stories where it goes back to the companies that have a lot of concentration with Open Air and this is, you know, one that I don't think it's so clear that you can say even if they get to the public markets that this is a slam dunk. So again I'd be worried about the concentration with open.
- [35:44]
G
The minute we're not saying this anytime soon, the minute we hear about Micron actually, you know, running going to the debt market just to raise capex. I mean forget it I mean this is, this is a story. Think about where the valuations in the premium that those five other companies that Michael just referenced in terms of hyperscalers, they're not the same multiples anymore.
- [36:01]
F
For that reason it's a new sensation, Mel, that continues to mystify
- [36:08]
B
even I the One Thing Lyrics Rise Macy's and Williams Sonoma both seeing shares rise of they topped earnings expectations this morning. We'll dig into the numbers and Fast Money returns. Welcome back to Fast Money. A few retail movers catching your eyes today. Macy's beating top and bottom line estimates for their Q4 before the bell. That stock ending the day up nearly 5% and Williams Sonoma rising as much as 7% after an earnings beat. The company also raised its dividend. Both though warned of rising fuel prices and tariffs impacting their outlooks for the rest of the year.
- [36:48]
F
Williams Sonoma, look at the chart in Williams Sonoma had a huge downdraft. You got to basically almost to the November low which is where we bounced from. So maybe it's enough to get a short covering rally here. But I don't my opinion, I don't think the worst is over in wsm regardless of how many what they sell.
- [37:04]
G
Tim Dutch oven Dutch?
- [37:05]
F
I thought we had matured past no, we have not.
- [37:07]
G
We haven't. Why would we have mature?
- [37:09]
E
I mean.
- [37:09]
G
And I don't even know what you're talking about. By the way, what's so funny about a Dutch oven?
- [37:13]
B
I use it all the time.
- [37:15]
F
That's unfortunate. I'm sorry to hear that.
- [37:17]
E
I mean my wife and I were talking about Crane Barrel, you know, West Elm, Williams. No, I don't know which one's the higher end, which is the lower end. She's trying to explain it all to me. But to our point earlier about the consumer, I mean this suggests the consumer is okay, right?
- [37:30]
B
But add these little things in and maybe it's a headwind.
- [37:34]
D
You see the dollar store, what was that one DG or DLTR last week? It was a bit of a disaster.
- [37:38]
E
Back to the case. You know, case shaped economy.
- [37:42]
G
Well, I think there's a argument to be made that in terms of a William Sinova, there is a little bit more of a niche consumer. There's a little bit more of a moat around their business. They have a brand that people believe buys them some prestige without having to go all the way up. And I would just say on Macy's this was a really strong quarter. I think it's questionable really what the catalysts are for for this one and this is the why the stock reflects it. At one point this was just a balance sheet recovery story. It was a real estate play. It was some of the parts. At this point, let's really ask what Macy's core business is. They made a nice move to digital. Are they really going to be a strong play through here, especially with a consumer that's under pressure? I don't think so.
- [38:21]
B
Coming up, retail stocks may have been higher today, but there's another part of the market that may be showing some cracks in the consumer. How recent was the private credit market are weighing in on fintech names like a firm and Block or Fast Money into. Welcome back to Fast Money. Fintech names taking a big hit today as investors worry that the private credit turmoil is spreading to the consumer loan space. The Wall Street Journal reporting Stoneridge's lendex fund, which holds consumer and small business loans made by companies like Affirm and Block told clients last week it could only honor 11% of redemption requests due to high demand. It is the latest sign that all is not well in the private credit space after issues hit institutional names like Blue Owl, J.P. morgan, Morgan Stanley, Cliffwater and that the consumer end of the space might be cracking. Mizuho Sandala joins us now for a closer look at these fintech fears. And great to have you with us.
- [39:14]
I
Thanks.
- [39:15]
B
I mean, I guess what underpins the fear here is that these names, the private, these fintech names that you cover, they have to get rid of these loans. They can't get carry them on the balance sheet. Somebody has to buy them.
- [39:26]
F
Right.
- [39:26]
B
And if these funds that are buying them are facing redemption requests, they're not going to be buying them anymore. So who's, who's at risk? Is anybody at risk? Is there a risk?
- [39:35]
I
If things are as bad as the Wall Street Journal portrayed, then these companies are at risk. But if you think about a firm, for example, they just upsized an ABS deal last week from 500 to 750 million. So do you think like all these pension funds that are buying it are risking averse or risk liking? I mean it sounds like they're sort of putting their money where their mouth is in terms of wanting more of these affirm loans. So I don't think it's an anomaly. I think what really is going on, you have to bifurcate between commercial private credit and consumer private credit. And I think they're getting kind of washed out together. But the consumer is actually quite strong, at least for the names that I cover.
- [40:12]
F
All right, so Dan, I'M not asking to comment on these stocks, but Capital One CoF and American Express since January have not performed well. To me, that's a tell on consumer credit in Europe history or your work. Any chance that these are leading indicators for what your space looks like?
- [40:29]
I
So it's a great comment. I would say that the way companies like affirm or upstart underwrite, they have an edge over the traditional lenders because they really, and I know it's a cliche, but they really use AI, right. So what people like Max Levchin can do is I think a step above the average lender. So you will get a little bit of a buffer even when things go bad, you will get a better performance out of the affirms. And the upstarts of the world.
- [40:55]
B
Have these stocks been through a consumer spending downturn or consumer downturn? Have we witnessed that?
- [41:04]
I
No. Yeah.
- [41:05]
B
Okay, so how do we know that these models work and can actually protect them from underwriting?
- [41:09]
I
That's why they're trading down. I think I agree with you. That's why they're trading.
- [41:12]
B
What have you seen? I mean, I'm assuming that you asked for proof like, well, how do we know that you are going to weather these downturns if we haven't been through one before?
- [41:19]
I
We've been through a rate hike that was unprecedented in magnitude, that was in 22. And a firm only had two quarters of rising delinquencies and they only missed the guide, the GMV guide by 5%.
- [41:34]
B
What was the job market doing at
- [41:36]
I
that time that you know the job market was different.
- [41:38]
B
Right.
- [41:39]
I
Yeah, I agree.
- [41:39]
G
So this, and this gives you a chance to kind of expound more on what you were just saying. But I think part of the reason a firm, people sometimes get lost in the fact that this is a company that is taking market share. This is a company that is growing. So when you look at the strength of the business in terms of growth and the competitive landscape, that's great until the consumer falls apart. So it does get back to good for them. Agentic AI. Good for them.
- [42:05]
I
Very good.
- [42:06]
G
Great for their story until there's a credit cycle. So again, back to the credit cycle that I know we don't have enough insight into. Do you think there is something that is, you can, you can be modeling from the 30 day delinquencies that tell us something in the medium term right
- [42:23]
I
now things are actually good from, from those delinquencies that I'm seeing on a firm and even on upstart things are actually much stronger than the market is perturbing right now. So either the market is wrong or you know like there's always corrections. But then you know, how many times have we had a firm trading down like 10, 20% because Apple is getting into buy now, pay later and then Apple is now partnering with the firm. So I think we've been through these fears and they come out with the, you know, on the upper end of this.
- [42:52]
B
So Dan, good to see you. Thank you. Mizuho. All right. Well some people might say where there's smoke, there's fire. Is there smoke?
- [43:00]
D
Well here, I mean we had, we had Jason Wilkes of Dave on a couple of weeks ago and they've been
- [43:06]
G
using it, his name was Dave.
- [43:08]
D
No, Jason, we told you that in the break so you'd call right now. But you know, he's, he said that they're using AI for underwriting. They have a 1% delinquency rate. I mean so to your point though, who knows what it looks like. But those companies make small loans loans, right? Like so if you think about it and they actually have some good data about how those, you know, people are going to pay back $200 on paycheck, advance, that sort of thing. But you know, Carvana would be the one where we start seeing delinquencies on a larger scale. I would think that that would be
- [43:38]
B
one squarely people, 100% of their loans get sold. I mean they need to get rid of these loans off the balance sheet.
- [43:44]
E
And there's so many things going on with private credit. It is a catch all phrase, right? It's like when someone talks about alts, like all alts are the same. They're not. And, but, but at the end of the day, you know, you're supposed to have, you know, low delinquencies, low default rates when the economy is doing pretty well, when the yield curve is steep, when like you know, earnings growth is strong and the consumer and unemployment is low. And to Melissa's point, you know, that's what we've, the environment we've been in. And I don't think many of these names have been tested. I don't think the private credit space, both on the commercial and the consumer side has been tested. And so I worry very, very much about the liquidity comp consequences if that were to happen.
- [44:19]
B
Coming out, gold losing its luster. The safe haven trade hitting six week lows today. The next move in metals and if the traders see a bounce back coming more fast money into. Welcome back to Fast Money Gold under continued Pressure hitting its lowest level in over a month. Settling below 40$900 an ounce with little change in prices after the Fed decision. The precious metal now more than 8% of the off the all time high. It hit on January 29. Gold miners also under pressure. The GDX dropping 6% to not just fifth down day in six. What do you make this move?
- [44:54]
F
That's what's concerning the move in the GDX because I thought it was holding in there obviously wrong. I think the stronger dollar is created a huge headwind in terms of what's going on gold. But I will say again, I don't think the gold move is over. I think the strength in the dollar will be short lived.
- [45:07]
G
I think the GDX certainly has to be sniffing out the issues that gold miners had when there was inflation. I mean they did not perform well at all even for a decent gold market at a time when there was inflation. Because gold is your inflation hedge. So let's be clear, the market has lost a lot of the speculative edge. What was going on in the gold price? I mean gold prices have still doubled over the last couple of years. So taking out some of that froth doesn't really bother me at all. The underlying central bank demand, the underlying dislocation, chaos, global geopolitics. I mean it's never been more strong. So don't run too far from this trade.
- [45:44]
E
Yeah, gold is a function of the dollar and real rates as well as uncertainty. Uncertainty is not going down. I think the, you know, the dollar is likely to weaken longer term and inflation is here to stay. So yeah I agree with Guy on gold. Gold rally is by not done over a longer term horizon.
- [46:01]
B
Up next, final trades, Final trade time.
- [46:10]
G
Timbo, the Mets are here in the nasdaq by the way, exciting day. Exciting Altria, the opposite of exciting. Which is why you want to own it here. Altria.
- [46:19]
B
Michael Kintopoulos.
- [46:20]
E
Uncertainty and inflation are here to stay. Gold's a great head for that. Have that extra spare tire in the trunk.
- [46:25]
B
Great to have you on the desk tonight.
- [46:26]
E
Thank you.
- [46:27]
D
Mike Micron. Amazing quarter, amazing guidance. You're going to get a chance to buy it lower and I think it is a buy lower.
- [46:32]
F
Oddly enough the more people here that would be at Shay on opening day. Lng Mel, thanks for watching.
- [46:38]
B
Fast Mad Money starts right now.
- [46:42]
A
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 Our HBCUs have a legacy that's straight up golden, and McDonald's is proud to help keep it that way. Since 2021, the Golden Arches has connected with the the Thurgood Marshall College fund to provide $1 million in scholarships for students headed to our HBCUs. That kind of cash helps keep bright minds on the yard dreams within reach and the future golden. Learn more about McDonald's Black and Positively Golden Scholarships at mcdblackscholars.com.