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CNBC's "Fast Money"
Micron’s Massive Move To New Heights… And Opportunity Despite Record Highs 5/26/26
00:43:22
AI demand fueling Micron’s big jump today, powering the tech giant to fresh record highs. The major market cap milestone it just hit, and what one memory sector analyst sees in store for the chip giant. Plus health insurers feeling under the weather, The New York Knicks championship run fuel a supercharged potential spin off from MSG, and where a top money manager is still finding opportunity despite the market’s record run. Fast Money Disclaimer
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- [00:00]
Narrator/Commercial Voice
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 Looking for a gift to make dad's day? Shop Betsy for all his favorites like personalized golf accessories or a handmade leather camping bag. Celebrate dad with classic gifts
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Melissa Lee
live for the NASDAQ markets in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. Good memory. Shares of Micron, another chip maker soaring again today. And they're not the only air related names. Well, in the green, is this a sign that the whole space is getting rerated and is it too late to get in on this rally? We'll debate that. Plus shares of Delta Airlines take off. What is weighing on UnitedHealth stock? We're counting down to salesforce earnings. And the Knicks notched their spot in the NBA finals for the first time this century. What it could mean for New York ticket prices and the future of the home court Madison Square Garden. I'm Melissa Lee comes to you live from studio. Be at the nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Dan Nathan and Guy Adami. You start off with a rerating game seemingly playing out. Continuing to play out on Wall Street. Micron sweet soaring nearly 20% to top $1 trillion in market value for the first time ever, leading both the S and P and NASDAQ 100. That move coming after UBS tripled its price target on the stock to more than sixteen hundred dollars as analysts get more bullish on the company's long term agreement opportunities. Other chip makers also cash catching a bit in a big way. In fact, 17 stocks in the iShare Semi ETF notching all time highs today. Some of the biggest winners include on semi amd, Marvell and Applied Materials. But it's not just semi surging. Check out dell rising over 3% after Melius Research upped its price target to 380, saying that it's an AI stock that deserves a higher multiple given strong execution. And Apple hitting fresh records intraday but closing fractionally lower to snap a four day winning streak. The move coming ahead of its closely watched Worldwide Developers conference in June. On June 8, in fact, where investors Expect to hear more on the company's progress. So are these record rallies signaling a broader rerating for the trade? And I should photo this whole thing. Nvidia did not move higher again today. Tim, what do you think?
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Tim Seymour
Well, you know, the fact that UBS has come out and put a triple on the rating should not be a reason that people suddenly say wow, and that's not what we're doing here. I understand. And in fact it's really just talking about a cartoonish move in Micron after weeks of cartoonish moves. So I do think that in the memory space I get a little bit more visibility that analysts now have for medium to long term contracts, removing some of the cyclicality of pricing and that we all know hyperscalers are willing to lock in really big pricing here. So I think, I actually think the more interesting part of this is the part of the NASDAQ which includes, I think Apple's move is more interesting to me not because I'm long, but because I think this is, you know, a 25% move since the end of the war trade. And it's something that I think is part of what's pushing mega cap stacks so stocks higher. So I look, I don't know that we're rerating the market suddenly now and I know there are a lot of people wondering is there something left to do in memory? And if you listen to UBS, there certainly is. I mean it's trading, you know, 6 times 27 is trading 15 times 29. And those aren't, in fact they say it should be trading more like in video which is, we know, somewhere kind of eight or nine turns higher.
- [03:51]
Melissa Lee
Yeah, I mean we grouped these three stocks together not because we think the moves are similar, but, but the narrative is similar in that all of a sudden now people are adjusting for a new AI reality if you want and they are factoring that into the model. So for Apple specifically, Melius Research also raises price target today saying, you know, get excited because Siri is going to be amazing. It's going to spur a whole new, you know, app developer sort of cycle here and preserve that iPhone moat. So there's this notion here that all of these deserve have a new narrative and deserve a new rating which, you
- [04:24]
Dan Nathan
know, hard for me to argue because the stocks have been trading that way in terms of, you know, the memory space. Look historically very cyclical, very commoditized. The wrong time to buy these stocks again historically is when they're at their cheapest. I think what analysts are saying now is you know what, you got to throw that whole cyclicality thing out the window and you got to rewrite in the terms of a valuation that might make sense in comparison some of these companies that have these secular tailwinds. So if you think memory now has gone from commoditized cyclical to this new paradigm, then these stocks are crazy cheap. If you think the competition is coming and there's going to be the other side of the mountain when demand starts to wane, then they're not as cheap as they look.
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Guy Adami
Yeah, you know, if we're talking about rerating. Right. So we're talking about a fairly narrow part until Micron hit that trillion dollar number. I mean, from a market cap perspective, these weren't like huge names, but they're seeing massive, massive numbers. I mean, just look at Micron, I think three, you know, fiscal years ago, they did like $15 billion in revenue. They're expected to do $110 billion this year. They had negative margins like four years ago. They're expected to have mid-70s right now. So this is clear, is fairly cyclical. Let's be clear. The company didn't see this coming because they didn't put extra capacity on.
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Dan Nathan
Right.
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Guy Adami
And so I'm not sure what has changed. Maybe you're seeing broader orders and we've seen that, I mean, Nvidia's sales were up 85% year over year. They're not slowing down. But when you look at the Mag 7, most of these companies are going to see earnings deceleration next year. At least that's what consensus is expecting. So when you talk about rerating, I don't really care that like a group of this, like the last sort of bastion of this trade is starting to perform. It's performing in a crazy, crazy way. If you're long these things, you're making a, you know, doing great, but at some point they're going to get cut in half. And I know that's really hard because when you put, you know, a sixteen hundred dollar price target on a stock that was six hundred bucks yesterday, it's going to one thousand. Okay, we know this, right? Stocks that are nine or ninety or nine hundred, they go to, you know, that nice round number. Is it going to go to 1600? Well, I remember December of 1998, Henry Blodgett, then an Internet said Oppenheimer put a, on Amazon. He put like a $400 price target. The stock was trading at 200. Within two weeks it was at 400. That's the sort of thing that goes on. A guy calls it Animal Spirits, but that' we are with a lot of these names right now and just understand that, you know, like I don't know if it's investing but this is chasing, you know what I mean? And it seems like it's a great trader's market for it.
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Karen Feiderman
So I agree with everything that's been said. So we don't know when the demand dynamic might change. Well, to me it's also very unclear when the supply dynamic may change. And if those two things happen at the same time, which we've seen that a number of cyclical companies, regardless of what, what the underlying product is, that won't be great. But how far out is that? I don't know. You know, Tim talked about the, the sort of more long term agreements, right, where you have, you know, what the cash flow is for some amount of time. It looked to me like some of them were variable. The first two, the first two years of them were fixed and then there was some flexibility on the pricing on the, the next three years. Still huge, huge amounts of demand. And obviously a steady stream of numbers will trade much better than a bumpy stream, even if the bumpy stream is a lot more dollars over the same period. So we're seeing a little bit of that. All right, don't treat these as commodities anymore. Don't treat these as cyclical businesses. Rather treat these as longer term locked in. I'm always a little skeptical of locked in, but I do see for the next couple, for two years, but for
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Melissa Lee
two years after that it's very.
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Karen Feiderman
Where does the stock peak into two years of run, two years or four years of run? I don't know.
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Melissa Lee
Right. That's what we're pricing in at this point in time.
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Karen Feiderman
Yes, I do.
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Melissa Lee
Years out.
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Tim Seymour
Yeah. Well, the fact that. Let's go back to the UBS report because this is what people are citing for today's move is, is that they say $4 billion in free cash flow from 27 to 29. So that's a little more than two years. In fact, that's kind of, you know, that's three years. And that's also more of a medium term dynamic where this is the true question at what point is this a real rerating or is this just a longer, you know, longer period? Dr. Extreme demand and a supply disruption that we know is more intense. I think it's probably somewhere in the middle. I think it's, it's. There's no question to me that there is more pricing power and I Think for the, for the foreseeable future. I know it's not exactly the right comparison, but if you think about what we're saying in commodity land, where there's going to be restocking and that either way, when you open up the straits, commodity prices stay higher, you can't tell me that hyperscalers and actually big industrial companies aren't going to also probably over buy and begin to make sure that they don't have a shortage. And I think some of this should be feeding into that same space. So, yeah, I believe that the valuations here are not stretched and I believe it's right to think about valuations a bit differently.
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Dan Nathan
Dan mentioned that I use the term animal spirits. I've. I've used the words individually. I've never linked them together. So I want to be clear. I thought your hair looks good. Well, you get a haircut.
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Tim Seymour
Yeah. What are animal spirits?
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Dan Nathan
You know when people just said frenzied, like, you ever see sharks around, like, you know, a dead whale? I mean, a lot of things happen.
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Melissa Lee
Sharks around a dead whale.
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Dan Nathan
Oh, I have. I watched the Historic Wildlife Network sharks around on Friday, President Trump and nobody
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Melissa Lee
wants to get at the rally. And Suffern Micron, boy, Micron is great. It's spending billions of whatever he said, billions of dollars.
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Dan Nathan
What a great company. It is. So I don't think it's coincidence now, again, if you want to use that term, Daniel, that feeds into this. Absolutely. And nobody wants to get on the other side of something like that. Having seen what happened with like an MP or an Intel.
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Guy Adami
It's worth noting though, over the last few days, and I'm sure you guys caught all this, you know, Uber CEO is talking about how they're pulling back their, you know, their engineers or programs from using cloud code and they're blowing through their budgets and, you know, you think that we thought pricing of tokens were coming down. Well, actually they're going up now because of consumption. A lot of these companies are like just going hog wild with this sort of stuff. But Uber is pulling back now. They're saying they're not asking a question.
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Tim Seymour
What is hog wild a form of animal spirits. Different.
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Guy Adami
Typically hogs. It kind of is.
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Tim Seymour
I think so.
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Guy Adami
Animals. I think so.
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Melissa Lee
Being an animal.
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Karen Feiderman
Yeah.
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Melissa Lee
And wild being some sort of a, like if.
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Dan Nathan
Arkansas. Anyway, high on the hogs. Remember that Sports Illustrated cover with Sydney Monk?
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Karen Feiderman
I do think though, that's in that.
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Melissa Lee
Would you like to finish?
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Guy Adami
You're jumping in here.
- [10:48]
Alex Sherman
This is not.
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Unknown Host/Announcer
You don't jump in like what are
- [10:49]
Guy Adami
you doing with these guys to cover? Yeah, we do. You know, I'll just say so Uber thing is really interesting to me. Maybe it's a one off sort of thing. There are similar reports about Microsoft. So here's the thing. If you're not seeing tech companies adopt this technology right now or they're using too much of it and they're not seeing the productivity or the efficiency, then you're going to have a hard time seeing that among other industries. Right. And so that's the sort of thing where at some point you just may have a real slow sort of pullback. It turns into a grind. It turns into a grind and then it comes all at once. And so you talk about what you know, we talked about Oracle, what was it? RPO's and this and that. Whatever. Oracle still went down 65% despite the supposed visibility that they had. And there's also this notion, well it's contracted, it's going to happen one way or another. That's not true.
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Tim Seymour
Okay.
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Guy Adami
If these companies, they're not going to, they'll cut these contracts, they will break these contracts if they have to. If it means that they are going to be like, you know, I mean
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Melissa Lee
drop compared to what was actually believed to be in the contract.
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Guy Adami
Yeah, I really have a hard time, you know, just kind of putting these things together. Is that okay? So a company like Micron, they're always really careful. If they put on too much capacity, that's disaster. You see how their company, they go from negative earnings to positive earnings is what's going on here is very different. They book these revenues, they book these earnings. But to have the visibility out two years and to start pricing it on that right now, that's what happened. Oracle, when the market wanted to reward them for those contracts and give it to them in market cap terms, it didn't go so well. Some of these are going to end similar.
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Tim Seymour
Well, but couldn't we say that Micron we know is locking in into low margin business? I mean the whole point here is these guys have tripled prices and we're locking them in for the long term. I mean I hear where you're going, but I. The one thing that's also different here is not only is there demand which obviously leads to higher prices, but I mean prices have tripled. I mean the numbers that Samsung just put out in their first quarter were bigger than their previous like nine quarters combined. So it's and Samsung still really cheap. So part of it is we don't even know where the price of these things are going to settle in on even when supply catches up a little bit.
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Melissa Lee
So let's get more on Micron and the memory trade. Let's bring in Morningstar senior analyst William Kerwin. He's got a $455 price target and the loan sell rating on the stock according to FactSet. William, welcome to the show. When you hear about these analysts price targets, 1625, you know, in the thousands, what is your number one sort of gripe with the assumptions that they make to get there? What do you think is the fallacy in that narrative?
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William Kerwin
Well, thank you for having me, Melissa. I think this really comes down to whether or not this is structural, long term, indefinite, kind of a permanent change in the MEM industry, as you've been talking about, or whether this is just the latest iteration of a cycle. And every cycle does look a little bit different. But we come in more on the latter. We think the market is trading as if it's the former. So if you're a bull on this stock, you're saying that AI is creating this structural demand wave that's going to benefit Micron for the next decade, if not longer. To us, we see this as a particularly strong and particularly durable upcycle, but a cycle all the same. And really we root this in. You know, being a bear on this stock for us is not being a bear on the demand side of the equation. And what AI is looking like, this is all about the ratio of supply to demand. And when we look out to 20, 28 in a couple of years, we see a ton of supply coming online from not just Micron but all of its peers. We see supply coming online in the west, in China as well. And we think this is all about, you know, after these prices have doubled, have tripled, have done even more, are they going to come back down to earth eventually? And that's the way that we value Micron today.
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Dan Nathan
All right, so what, I'm ahead of that. 28, 29. What should you be watching to sort of that's going to be the sign that the cycle actually is in play. What's the one thing you'd be watching for?
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William Kerwin
Well, you know, you're right. The question is how high can this go? Even if it is a cycle, we really look at those fabs coming online even in the latter half of 2027 to start to see some incremental pricing movement if that causes just the hint of a deceleration or even a bit of a decline sequentially, even if prices stay high. That could portend a lot more of that happening as more of those fabs come online in 28 and that could definitely spook the market.
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Tim Seymour
Hey William, Tim, appreciate you kind of staying in the pocket on this one because it's not easy. And I guess my question for you is 455 probably, I don't know when you got to 455. My guess is you've had to upgrade this stock along the way because455.5, I realize, you know, is still now probably down 40% off of the top. But it's, you know, it wasn't a month and a half ago. So I'm just kind of curious. Was there some element though of your call that you, you were kind of bulled up?
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William Kerwin
Well, definitely Our valuation has come up over the last two years and I think it's no surprise that the amount of scarcity of this supply and demand, it's caught us by surprise. As you talked about earlier, it probably caught management by surprise. They had not built for this demand, but it is, there's an amount of bullishness in our take. So we're more bullish today than we were two years ago. Demand is a structural driver and yet we still come in below where the market is at. And this is just a more nuanced take. We think that this has really structurally improved what Micron can look like over the course of a cycle, both at peak and at trough. We think that when it ends up somewhere at mid cycle, sometime in the long term, it's going to look a whole lot better than it would have over the last cycle level. And yet we still can't justify just how high it's going today, much less a sixteen hundred dollar price target because we just think that implies that this is going up into the right for the long term without any sort of correction in the interim. And we just can't justify that when we think about the commodity like nature of this technology, the fact that you have multiple players that can offer fungible chips and that are not coordinating how they build out supply, the moment you get to, you know, a percent or two of oversupply, you can really see prices crash. And that's what worries us longer term.
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Karen Feiderman
William, it's Karen, Thanks. First of all, thanks for being the only, the only one out there to have a sell rating. That's sort of a, interesting place to be. So on the demand side though, have you been, you talked about the demand is bigger than you thought, but how do you see it playing out over the next Few years on the demand side, demand spreading beyond hyperscalers.
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William Kerwin
Well over the next few years, we think demand looks very strong and these expectations keep going up as well. You know, I think it's become pretty consensus that memory is a key bottleneck to the performance of these AI models. And we've talked about Micron a lot on the DRAM side, on the HBM side, but this is playing into Nan too. And I know that the show has talked about SanDisk in the past before and now with with models like technologies like kvc, if that's familiar in new generation AI models using more of both of these types of memory. So we really see no end in sight for the demand side of the equation. And again, it just gets back to when we get all of this supply coming online to fulfill this demand, is it going to be too much? And that ratio is really important and we worry about those prices coming back down to earth. But certainly the demand side we're very positive on and we think it just continues to accelerate.
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Melissa Lee
Should investors view with skepticism at the long term contracts that these players have in place?
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William Kerwin
I think with some healthy skepticism for sure. You know, this is not the first time that memory companies have talked about long term agreements. We certainly think this is the most cheap that these long term agreements have had in terms of financial guarantees. But really the way that I would look at it is this is a hedge to some of the cyclical downsides, but it does not eliminate the cyclical downside entirely. If you get customers walking away from these contracts, yes, they may have to pay you a certain amount of money, but that is not going to be nearly as much as what they are walking away from. So we see it as a bit of a hedge. We think they are a positive. But are they eliminating cyclicality entirely? I don't think so.
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Melissa Lee
All right, William, great to speak with you. Thanks for your time.
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William Kerwin
Thank you.
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Melissa Lee
William Kerwin with a Morningstar. I think that's an interesting take on the contracts we had. Ben writes this on closing Bell overtime and I asked him about the contracts and he said we don't question Microsoft's RPOs, we don't question Oracle's RPO. So why should we question these contracts? The way he phrased in terms of eliminating the downside but not guaranteeing the upside, I think is a pretty balanced view.
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Karen Feiderman
Well, you were just talking about the Oracle RPOs being question that were they themselves, I think, you know, question them. So I don't know if it would be similar to that, but that wouldn't be shocking, but this is not just
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Guy Adami
Micron and some of these other storage. Look at intel. And I was very wrong. When they reported on April 23rd the stock, you know, gapped up 20 some percent or something like that. I was kind of going back and I went through this analysis. I mean peak earnings and sales were back in 2021. They had $79 billion in sales at $5.5 in earnings earnings and they had like, I don't know, like 57% gross margin. This year they're expected to have a $11 in earnings. Let's be generous and call it $2. Let's just say they have a couple more beats. This last quarter. They beat by like 15% or something year over year in the earnings. And then in sales they're expected to be down, I don't know, like $20 billion from their peak and expected to have 40% gross margins. So how do you justify the stock up 80% since then? You're basically using entirely new frameworks for how these companies are going to operate, operate, how they're going to monetize their businesses and how long these cycles are going to go. And I just don't know how you can't look at any of this and say this is really, really dangerous because it's stuff that we have not seen in 28 years.
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Melissa Lee
Turning naturally, developments on the Iran war. Brent crude rising more than 3% as Iran vows to retaliate against U.S. strikes. WTI crude meantime, fell. CNBC's Eamon Jabbers has the latest. Amen.
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Eamon Javers
Hey there, Melissa. CENTCOM is now pushing back on a media report this afternoon that the US Navy had begun escorting ships through the Strait of Hormuz, saying in a statement that in fact US Forces are not currently escorting commercial shipping through the Strait of Hormuz. And that reflects the overall sense of standoff that we have today around the whole war in Iran. Despite what are described as intensive back and forth negotiations between the United States and Iran, there has been no diplomatic breakthroughs. CENTCOM said yesterday that the US had conducted what it called defensive strikes strikes on targets in southern Iran despite the ceasefire that remains in place. And the Iranians today threaten to retaliate for those strikes. And that means the uneasy balance of power continues. The United States military has been unable to eliminate Iran's nuclear program by force and unable to reopen the Strait of Hormuz by force as well. And the Iranians seem unwilling to concede anything at the negotiating table that they haven't conceded on the battlefield. Now, we didn't see President Trump on camera today. He remained out of view hosting meetings and attending a doctor's appointment today. And just within the past few minutes, the president has said that he'll host a Cabinet meeting at the White House tomorrow instead of at Camp David, where it had originally been scheduled. That, he said is due to weather issues. So it's not clear what exactly will be on the agenda for that meeting. Melissa but you can expect that the topic of Iran anyway will be foremost on anybody's everybody's mind.
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Melissa Lee
Back over to you, Eamon. Thank you, Amy Javers. Coming up, Delta reaching new heights. Shares soaring to a record even in the face of mounting flight cancellations. How the airline is looking to bolster operations ahead of the summer travel season. Plus health insurers taking a sick day. Elevance Molina, UnitedHealth all getting hit to kick off the week. The headlines weighing on the group and what they need to do to get back on their feet. Don't go anywhere. Fast Money's Back in Two
- [23:01]
Podcast Narrator
A History of the United States in 100 Objects is a brand new podcast from 99% Invisible in BBC Studios. Each week we're looking at a different object from across American history with a unique story to tell about who we've been, what we've built and what we've allowed ourselves to forget. Some of these objects are well known, many are not. But all of them carry the story of how we got to this moment. Find A History of the United States in 100 objects on the 99% invisible feed. Wherever you get your podcasts.
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Narrator/Commercial Voice
gift to make dad's day? Shop Betsy for all his favorites like personalized golf accessories or a handmade leather camping bag. Celebrate dad with classic gifts.
- [24:08]
Melissa Lee
Welcome back to Fast Money. Shares of Delta surging more than 4% to set a record close today as Memorial Weekend kicked off the unofficial start of summer travel season. The move coming even as flight cancellations for the carrier mount. The Wall Street Journal reporting Delta is pacing ahead of the industry average this year. This year, pilot availability accounting for 35% of cancellations, up from 7% in 2024. Delta says it plans to ramp up hiring to prepare for summer demand. Stock is up four and a quarter percent. Tim.
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Tim Seymour
Well, part of this is I think that they have shown their ability to be resilient both in the face of higher fuel costs and they have higher margins and they're running better than anybody. I think at some point it was an interesting day because airlines had a great day especially on this. It's another like war is over day. And so it was a great day for the airlines but everyone else in the hospitality space got got creamed and got creamed because we had consumer confidence number that talk about delaying. So I love Delta. I'm a big fan, I'm a big bull as it comes to the airlines relative to their peers. I think it's going to be at 100 before it's at 50 bucks. I can tell you that. I believe that. So I wouldn't run too far away from the trade. But I think people do need to take heed need of some of this dynamics where I think there are people that are waiting on trips especially because they believe airfare will come down.
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Melissa Lee
Yeah. In terms of oil being down, rates being down. I mean retail also didn't get a bit and I thought that maybe even like a Wal Mart could get off the mat after earnings. But no bid today.
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Karen Feiderman
It's back lower than the mat was yesterday or two days ago. Right. I know you think although Delta, I got to say if you, I don't know if you been to Delta One.
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Melissa Lee
Oh, it's amazing.
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Karen Feiderman
It is amazing. And that and that whole recession of the plane of you know, however many very high premium. I mean that's in their strategy for a while. It's really working. Those seats are all full, they're all high margin.
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Tim Seymour
It's working and people are very loyal.
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Melissa Lee
Yeah.
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Dan Nathan
Greg Abel, I mean the new Berkshire Hathaway, he just announced a couple billion dollar stock purchase. I mean this is something Warren Buffett talked about years ago about his. I mean they got into the airlines, they got out I think in 2020. It is fascinating though with consumer confidence where it is for a host of different reasons. I think one of them, you know, people are concerned about their jobs. In an AI world you still have the airline straight in the way they are. It's very impressive.
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Guy Adami
Expedia is where I go here. The Stock's down from 300 to 20. This a company is supposed to grow earnings 20% a year for this year and next high single digit revenue growth at 90% gross margin. Company good balance sheet trading at 11 times earnings single digit next year. And so to me, if you think all this stuff is coming back, airlines baking out, breaking out to new all time highs, I think this is one that probably makes a lot of sense here.
- [26:47]
Melissa Lee
There's a lot more fast money to come. Here's what's coming up next.
- [26:51]
Unknown Host/Announcer
Under the weather, Health insurance stocks deep in the red today. What's weighing on the names and how do you trade the stocks now? Plus, stocks keep hitting fresh records. But there may still be some opportunity in some of the priciest groups where a top money manager is putting money to work and the sector she sees continuing to climb. You're watching Fact Money live from the NASDAQ market site in Times Square. We're back right after this.
- [27:20]
Podcast Narrator
A History of the United States in 100 Objects is a brand new podcast from 99% Invisible and BBC Studios. Each week we're looking at a different object from across American history with a unique story to tell about who we've been, what we've built and what we've allowed ourselves to forget. Some of these objects are well known, many are not, but all of them carry the story of how we got to this moment. Find A History of the United States and 100 objects on the 99% invisible feed. Wherever you get your podcasts, it's smart
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- [28:45]
Melissa Lee
Welcome back to Fast Money. Health Insurers Elevance Health United Molina Health Care Looking a little under the weather today, United was the biggest drag on the Dow, cutting more than 70 points from the index. Karen, you flagged the move in this sector.
- [28:58]
Karen Feiderman
Yes, I do like UnitedHealth though. I mean, yeah, this is down a little bit today. There's fears of are we going to see some health care cutbacks from the government, but I think the worst is behind UnitedHealthcare and it's not a crazy multiple and I think they're conservatively guiding these days. So I actually like it of the group.
- [29:17]
Dan Nathan
The fits and starts though are pretty remarkable. We traded not recently, but that level we traded down to is the same level we traded down to in early 2020. We bounced, sold off hard bouncing again. The headline risk here is significant. The valuation is compelling if you can get around the headline risk. Risk. But I'd rather own it here than not.
- [29:35]
Tim Seymour
I think I do own it and I think they're at least positioned to kind of get back to those insurance margins that are what had that be as Carter said, one of the greatest charts of all time.
- [29:46]
Melissa Lee
Like God.
- [29:47]
Tim Seymour
Like not a pair of twos. And and I think the stock is is priced at a pair of sixes right now. So therefore I think. Well but, but it gives you some upside because I think it's probably more likely a pair of jacks.
- [30:00]
Melissa Lee
Oh. Which is even better.
- [30:01]
Unknown Host/Announcer
Wow.
- [30:01]
Tim Seymour
I believe so.
- [30:02]
Melissa Lee
Okay.
- [30:03]
Tim Seymour
I'm playing cards.
- [30:04]
Melissa Lee
Coming up, do not sleep on the market rally. Why A top private wealth manager still sees some great opportunities even after the recent run up and where she is putting money to work. Fast Money's back.
- [30:16]
Unknown Host/Announcer
Missed a moment of fast. Catch us anytime on the Go Follow the Fast Money podcast. We're back right after this.
- [30:31]
Melissa Lee
Welcome back to fast money. The NASDAQ and S& P setting new records to start the holiday shortened week both on four day winning streaks. The Dow meanwhile shed more than 100 points. Eli Lilly unable to hold on to gains at the close and ending the day just in the red. The company announcing plans to acquire three vaccine makers for almost $4 billion in cash as it looks to expand into infectious diseases and some after hours action. Cloud companies Box and Zscaler both topping earnings and revenue estimates. You see the stocks trading lower. Zscaler down by 19%. We do have a news alert here. We want to get to the President posting about regulation of predictions markets. Let's get back to Eamon Javors in
- [31:06]
Guy Adami
D.C. eamon hey there Melissa.
- [31:08]
Eamon Javers
Yeah, this just within the past couple of moments. Take a look at the President's comment on social media. He says it is critically important that the CFTC's exclusive authority over prediction markets is maintained and that they will thrive under my leadership. We are setting rules of the road that are the gold standard for the states. We are currently the crypto, Bitcoin, etc. Capital of the world. Other countries are trying diligently to replace us in that capacity, but we won't let that happen. It is a major industry and we must protect it, says the president. So the president defending his stewardship of the cftc. This comes after the New York Times had a major investigation over the weekend that suggested in the Times words that that the CFTC had been gutted under the Trump administration. And one finding in the story over the weekend from the New York Times, they said on the prediction market side, the agency has switched from an opponent to an ally in legal battles over how the markets should be regulated. It has announced just one case in the second Trump era against an individual accused of insider trading. They also say that the cftc, which was first set up primarily to watch for skulldudgery in markets for farm goods like pork bellies, has backed off enforcement just as its responsibilities have rapidly expanded. So the president, not saying that he's specifically responding to that New York Times piece on the cftc, but clearly felt a need to defend his stewardship of the cftc. And you see the social media post that resulted from it.
- [32:39]
Melissa Lee
Melissa Eamonn, thank you. Eamon Jabers. Of course, this as all of the major trading platforms have prediction market offerings. Offerings, dan.
- [32:48]
Guy Adami
Donald Trump Jr. Is a strategic adviser to both Kalshee and Polymarket. That's all I got to say.
- [32:54]
Melissa Lee
Is this a risk, I mean, in your view, to a Robinhood, to, you know, to the platforms that have prediction market components that are growth drivers?
- [33:03]
Tim Seymour
No, I don't see why they wouldn't also follow the trail of regulation. I mean, I think more regulation equals higher valuations for everybody. That's how it's worked in every other subsector.
- [33:14]
Melissa Lee
Morgan Stanley Private wealth management sees opportunities, even some of the priciest market groups. Kathy Entwistle is managing director, Private wealth advisor at the firm. Kathy, great to have you with us.
- [33:24]
Kathy Entwistle
Great to be here.
- [33:25]
Melissa Lee
Thank you. So you're, you're client based, high net worth individuals. They still like the trade. How are they feeling at this point? I mean, we're talking on a day where Micron is up 20% and is a trillion dollar company.
- [33:37]
Kathy Entwistle
Yeah, I mean the market has been on a tear for sure. And certainly anyone that's been participating in the market is very happy at this moment. The question is whether you can continue to find opportunities or not. And we do think there are opportunities there. You just have to be mindful and just a little bit careful about where you're going. Also, if we do have any kind of a larger pullback, it would be a great opportunity to jump in okay,
- [34:01]
Melissa Lee
so where are the opportunities? Let's say outside of the tech trade. A client says we want to diversify, we don't want to be all in on chips and you know, meta and all that.
- [34:09]
Kathy Entwistle
We're putting clients in real assets right now. So we're also looking at energy infrastructure, things like that, the digital space. So I do think that that's an area that we can look at. We're actually looking to pull back a little bit on the duration of bonds also because of some of the recent occurrences in the interest rate market. And basically we would just stick with US emerging markets and also start dipping toes into the small cap arena.
- [34:42]
Dan Nathan
The energy trade is actually hanging in there. We mentioned earlier SLB is at levels we saw three years ago, so they're trading well. How important in your opinion is the underlying commodity or have people realized that these energy stocks actually can go higher?
- [34:54]
Kathy Entwistle
Regardless, I think it's really important with a market where we have the equities up as high as they are, you do want to find those opportunities. And energy is going to hold up even in inflationary environments. And I think because of what we're seeing in the inflation space and also some of the signals we're getting out of like the Fed futures and so forth on rates not being cut but potentially being jacked up a rate or so it's time to consider adding some serious commodities and real assets into the portfolio, a sleeve of it.
- [35:28]
Karen Feiderman
So thanks for being here, first of all. So when you talk about real assets, is that real estate is an art, is it it things outside of the market? What are you referring to?
- [35:37]
Kathy Entwistle
Well, when we, when we think about real assets, we're thinking about some of the things inside the market, certainly outside the market as well. But we like hedge funds. We like as a, you know, gold and silver and things like that. We like energy and different areas that will respond well in the kind of market that we're in.
- [35:56]
Tim Seymour
Kathy, in terms of asset allocation, have you, have you changed at all in terms of, and I hear you talking a little bit about fixed income and some of the dynamics, even private credit, which it was six months ago, it seemed like it was part of an eye of the storm. Anything changed in terms of how you're viewing asset allocation?
- [36:12]
Kathy Entwistle
Yeah, when I look at asset allocation, I'm looking at the big picture and driving down. So the allocation piece isn't changing too much in terms of equity allocation, fixed income and alts. But what I would say is we are bringing more of the evergreen alternatives into clients portfolios as a diversifier in a non correlated asset which I think makes sense in a market where we're up so high. We want to find other areas that
- [36:35]
Tim Seymour
have one of those that, that's tradable. In other words, are these some of the ETFs like the JP Morgan. Well, it's Morgan Stanley so you get the Morgan Stanley of course.
- [36:44]
Kathy Entwistle
Well for, for example I would say you were talking about the credit. There's also private equity, there's infrastructure. There's a lot of infrastructure out there that you can buy in an evergreen structure which is considered an alternative investment the way it, it's put together and created. So we like all of that. And in the, you know, back in the day infrastructure was tunnels and bridges and roads and today it's communication towers and, and digital and, and things like that. So we definitely think that with all of the data centers and all of the building that's going on and the lack of energy to fuel all of this, there is going to be a scarcity and we want to invest in the scarcity before it becomes too expensive.
- [37:21]
Melissa Lee
Are you worried though that clients will be overindexed to the air trade? Because you're labeling infrastructure. I mean that's all tied to AI. AI on top of the market exposure which gets you a heavy dose of AI tied to energy which is also, as you outlined it, AI driven also.
- [37:36]
Kathy Entwistle
I think when we look at it though, everything is, is becoming AI. Everybody's utilizing AI. AI is, is really changing the way business is getting completed and the efficiency of it versus the actual output. So I think when we look at it from that standpoint that AI is everywhere. It's not, not really enforcing the trade when the trade is, you know, presumably so high.
- [37:59]
Melissa Lee
Kathy, great to see you. Thanks for coming by. Kathy at Whistle of Morgan Stanley, not JP Morgan. Yeah, yeah.
- [38:05]
Dan Nathan
Commodities, metals. I agree with that. I mean you want to be. Look crude can go sideways here even slightly lower and I think these energy stocks still work. The fact that OI hangs in here despite the headlines and knockdown of the underlying commodity to me speaks volumes.
- [38:18]
Tim Seymour
It was an interesting day. Gold was down one and a half, half percent. Gold miners are up three and a half percent. So there is this dynamic where I think the underlying spot will have volatility. But I think copper miners are going to make fresh all time highs. They're probably 15% off of them. Southern Copper Freeport. Look at Rio Tinto. Bhp.
- [38:36]
Melissa Lee
We were just on the closing bell. Overtime. We were.
- [38:38]
Karen Feiderman
That was my debut.
- [38:40]
Melissa Lee
Exactly. And you weren't nervous at all, were you?
- [38:43]
Karen Feiderman
A little bit, yeah.
- [38:44]
Tim Seymour
Get nervous on tv? A little bit.
- [38:45]
Karen Feiderman
I do.
- [38:46]
Kathy Entwistle
A little bit.
- [38:47]
Melissa Lee
Energy. Talking about energy.
- [38:48]
Karen Feiderman
No, I really like the energy trade. I just think that we need more energy and more, more stock. More money will flow into energy equities.
- [38:56]
Melissa Lee
Coming up, the New York Knicks are heading to the NBA Finals. And the championship run could mean big things. For a potential spinoff from MSG, how the nearly 30 year finals drought could supercharge a split when fast money returns. Welcome back to Fast Money. The New York Knicks completed their sweep of the Cleveland Cavaliers in the NBA Eastern Conference Finals last night. Now they're heading to the NBA Finals for the first time in nearly 30 years. This could have big implications for ticket sales at MSG in the future of sports business. CNBC's Alex Sherman has more on this. I mean, obviously must be good for msg.
- [39:35]
Alex Sherman
I mean, the timing couldn't be better in the sense that MSG is now considering, the Dolan family considering splitting this company between the Knicks and the Rangers. So there have been a series of splits over time for all of the Dolan entities, the most recent one being where the, the real estate is separate from the networks, which is separate from the sports teams within the MSG universe. And of course, MSG was at one time part of a larger company in the Cablevision enterprise. So all of these decisions have been done to theoretically maximize shareholder value. This one is very clear, which is that the Knicks and the Rangers today the market cap of this company is about eight and a half billion dollars. But if you take a look at the private valuations of these teams, and we have Mike Ozanian at CNBC does this every year where he comes out and publicizes the valuations. The Knicks are valued at about $10 billion. The Rangers are valued at about $3.8 billion. And that's before this year's Knicks run. So you add that up, well, that's a lot more than $8.5 billion. And so the idea here is if we split off these two teams, potentially if the Dolan family were to sell one of these teams, you would be able to crystallize the value of those teams in the run up to that. So it's good for shareholders theoretically because the valuation should lift under the idea that perhaps one day one, if not both of these teams will be sold.
- [41:01]
Melissa Lee
Is it believed that the next step for MSG is to actually spin off these, that these teams or that or that they will be bought?
- [41:09]
Alex Sherman
Well, I think the spin would happen first.
- [41:11]
Melissa Lee
Okay.
- [41:11]
Alex Sherman
I don't think there's any particular rush from the Dolan side to sell either of these teams. All you need to do is look at the valuations of both. Pretty much all the NBA teams and all the NHL teams and all the NFL teams. Like, it's been up and to the right on all of these franchises, and that's largely driven by these big national media deals that are all locked up. So you've got the revenue coming in. There's a fair amount of certainty there that these franchises will be in good shape. But look at. There's a scarcity value attached to all of these teams. So in the end, this is part of the reason why most people feel that sports teams perform better as private assets rather than public ones, because the valuations are not all that attached to the actual finance finances. There's only so many of these. They're trophy assets. They trade through the roof because of supply and demand reasons. And they're not all that locked up from a quarter to quarter basis like many publicly traded companies trade.
- [42:05]
Karen Feiderman
Does it matter what the basis of NICs is in terms of tax? If it were to get sold? I mean, how much would they actually keep? How much would investors keep of that?
- [42:14]
Alex Sherman
Yeah, part of the reason of doing these varieties of sort of spins and splits is in fact, for the tax, tax efficiencies, particularly if you were to just sell one of the teams and not both, you don't take that same large tax hit. So that is part of the motivation of doing it in this way, because you're right, there would be a huge tax hit based on the basis the Dolan family has owned these teams for decades. Just a question for you guys. Are you all Knicks fans?
- [42:42]
Dan Nathan
Mel's a huge fan.
- [42:44]
Guy Adami
Yeah.
- [42:44]
Tim Seymour
Yes, but she talks about it all the time.
- [42:45]
Alex Sherman
Can I ask you a quick question, which is, Jim Dolan has long been thought in the New York area, of course, to be one of the most hated owners if the Knicks win the championship this year. Is all forgiven with Dolan?
- [43:00]
Karen Feiderman
No.
- [43:00]
Tim Seymour
Well, that's a fair question. And as a Ranger fan, I mean, I think he meddled in through fire. Jeff Gordon, and the team's never been the same. And Montreal is now in the conference finals. I. I actually think you win in New York, a lot is forgiven given, and I think this team's going to win.
- [43:16]
Melissa Lee
All right, Alex, good to see you. Thanks. Alex Sherman. Coming up, a make or break moment for software investors. Awaiting salesforce results after the bell tomorrow, what the industry giant could tell us about the beaten down sector. That is next. More fast money into. Welcome back to Fast Money. Salesforce is scheduled to report fiscal Q1 earnings tomorrow after the bell. Investors watching whether the software company can deliver top line growth growth. And they'll also be looking for any updates on Agent force. Shares of CRM are down 32% already this year, underperforming the broader software sector by sitting out the recent attempt at a rally. I mean, I think there are a lot of questions here as to whether or not they are that entrenched in enterprise and if what they can do for enterprise can be displaced.
- [44:00]
Guy Adami
Yeah, we got a little of this last week. We saw Workday report, we saw zoom. And obviously these are not that close comparables. But the stocks bounced on, you know, better than expected and the sentiment is very obviously poor. But they gave to back, back all of those over the last, all the gains over the last two days. So I wouldn't expect maybe you get a 5, 10% pop on a beaten raise. It's not going to be that meaningful. And of course Benioff's going to come out and talk Asian force price at 10 times at least.
- [44:22]
Dan Nathan
In the call last quarter they announced a 50 billion stock buyback which was a third of the market cap. And I thought, you know what, they're putting the money where their mouth is. The stocks are rallying that it did for about two days and we're actually lower now than we were before. Talk about, maybe they'll talk about accelerated stock buyback adding to it. But I think there's a chance you get a bounce here. We've been talking about the IGV for a while. I still think that goes higher.
- [44:44]
Tim Seymour
I think the software space has done a nice job of sorting out the winners and losers. I mean, look at an Adobe, for example. Look at some of these names that were, you know, formerly the monsters. And yet you look at some of the high flyers, even a crowdstrike, which I am long and I just. There are places in software, especially around security, that I think there are no reason, there are some reasons to be concerned about the enterprise. But there's no question that the budget and the demand side of this is working, working. So I don't need to chase CRM here.
- [45:11]
Melissa Lee
Up next, final trades. Time for the final trade. Timbo.
- [45:21]
Tim Seymour
I tell you what, like a deer to the woods. Unh. It will be back.
- [45:26]
Melissa Lee
Karen.
- [45:27]
Kathy Entwistle
Yes.
- [45:28]
Karen Feiderman
So the sleeper of the trade is in video. I like it even here.
- [45:35]
Melissa Lee
Dan.
- [45:35]
Guy Adami
Yeah, I think the sleeper of that little airline trade is Expedia.
- [45:40]
Dan Nathan
Mr. Dolan Tim is a fan of you and the New York Knicks. Let's set the record straight here.
- [45:46]
Guy Adami
Huge fan. Well no, you can be a big fan and not like the owner and then not allowed in the Madison Square Garden, right?
- [45:53]
Tim Seymour
Let's just say, let's be clear. Go Knicks. Go Dom. Let's go.
- [45:57]
Melissa Lee
Thank you. Thanks for watching Fast Madam Race Our Sound
- [46:02]
Narrator/Commercial Voice
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
- [46:35]
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.
- [46:45]
Dan Nathan
Oh, what a tackle from Naomi Girma.
- [46:48]
Guy Adami
Absolutely brilliant.
- [46:50]
Melissa Lee
Bank of America champions U.S. women's national team Member Naomi Girma and everyone who dares to ask, what would you like the power to do? Bank of America Proud to be the official bank of U S Soccer bank of America NA Member FDIC.