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CNBC's "Fast Money"
Oracle Hits A Snag… And How Prime Day Could Boost Retail’s Slump 10/7/25
00:43:36
Shares of Oracle getting hit on reports the company is seeing thin cloud margins from its Nvidia chip rentals. So is the hiccup a sign of more cracks to come in the AI trade? Plus Retail stocks stuck at check out recently, but could Amazon’s Prime Day and other retail deal days help rejuvenate the space? A top analyst lays out what she sees in store for the group. Fast Money Disclaimer
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With the Fidelity app?
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- [01:03]
Brian Kelly
Live from the NASDAQ market site right here in the heart of New York City's Times Square. This is fast money. Here's what's on tap. A warning sign from Oracle. Shares are down, but for an interesting reason. Is it a storm brewing or maybe just another head fake? Fire up your credit cards. It's Amazon prime big deal time, whatever that is. We're going to talk about what's at stake for Amazon and other retailers, plus how a devastating fire could impact Ford's supply chain for months. The White House policy that may hit housing gold, it keeps shining bright. Hitting another big milestone. Hi everybody, I am Brian in for Melissa again tonight. Coming to you live from Studio B at the NASDAQ market site. On your desk, Tim Seymour, Karen Fineman, Courtney Garcia and Steve Grass. Welcome everybody. All right, one, we start with what might be a sign the red hot trade may be showing some cracks. Or not. Oracle shares down today it was on a report that its margins may be lower than thought because of some in video related accounting. Oracle, which briefly flirted with a trillion dollar market cap after earnings last month now down about 18% from its record high. It's complicated so let's make sense of the story and talk about what it may or may not mean. Joining us on set, our friend Sima Modi.
- [02:29]
Sima Modi
Brian, thank you. It's great to be back and a big story today we saw Oracle move as much as 5% on this report. From the information that alleges that Oracle's cloud margins, which is tied to the build out of infrastructure, will be lower than what Wall street is currently predicting. And that's due to the cost of buying in video chips, the capital intensive nature of building out data centers. Whether it comes to the power issue, also labor, what's important to note is that this concern around long term profitability is not new. Even when Oracle came out with that blockbuster report last month and came out with that mega backlog of Cloud contracts up 529%, also known as RPO, which is what sent the stock higher by as much as 40%, even then, analysts who covered the stock raised the concern about visibility. What is the, what is the return on investment? What is the long term profitability picture look like 6 to 12 months out? And I think this report is now showcasing some of those concerns coming back to light. What we do have is in less than a week, Oracle World kicking off in Las Vegas where we will have the two new co presidents alongside Larry Ellison, the co founder, the founder of Oracle, who will be on stage discussing the Oracle build out of data centers, the growth opportunity. And after that will be the Thursday analyst day where the financially motivated questions around profitability, what the tenure of this open air partnership looks like, will likely get addressed and will obviously be market moving given that there are now these concerns around what the picture looks like for Oracle.
- [03:57]
Brian Kelly
Well, one would hope that whomever might be at that Oracle World in Las Vegas will ask either one of the two CEOs or Mr. Ellison where they're going to get the power. That aside, this was a funky report Sima because came from a tech research publication. The information I was trying to figure out sort of what it meant, like what was the reaction to this report? Like was it like, oh, Oracle has accounting shenanigans or this is kind of how we do it?
- [04:25]
Sima Modi
I think to your point, this is just a pay to play move for companies like Oracle that are seeing themselves as a key enabler in the whole AI workload space and therefore think that they need to continue to increase capital expenditure to be a critical player in this whole story. And so a report that suggests that maybe margins are going to be a little bit weaker than expected in the short term. But the big question is when does that profitability picture improve in the, in the long term? And that's what's being sussed out by the street right now. I think the power play story is going to be interesting. You know, right now yes, there's a learning curve around building data centers and understanding the capital intensive nature of power. But over time you would hope that that would be commoditized and become less of a concern.
- [05:07]
Steve Grasso
It feels funny to be poking at margins when we knew the margins weren't going to be good.
- [05:10]
Brian Kelly
Right.
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Steve Grasso
And so if you talk about a gross margin and this, this report referred, referred to 900 million in sales and 125 million in profit, so about 14% gross margin. What I've seen the market do for the last three weeks and you know, this is like open anybody, but I mean it feels like no one has paid attention to margins. No one's cared. Why do we care about it today? And so I think it's dead on. I think we've worried about the profitability of all of Oracle's business. In fact, the story for Oracle has been this transition from highly profitable software business, you know, margins in the 60s to 70s to OCI, which is in the mid 20s at best. And this is below that.
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Brian Kelly
And I think that's, that's the point is that it was, I think it was the separation between the 70% that people thought it was and the 14% that it is. I think it was just a separation. They knew it was low, but I don't know if I think that caught 7%. It was like Steve Grasso dropping a penny on the street. It's like a stock that's gone from 100 to 284, whatever it is. Right. Let's not make too much of this report. I understand it did move the stock. It was a compliment. Steve Grass is a lot or a little, you know, it was a little. My point is the stock moved a tiny bit in relation to how it's moved. The last year and a half was like a catastrophic fall for Oracle.
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Karen Fineman
No, but I mean, remember when that, that sort of stunning RPO report came out, right. Of this giant, giant backlog. There was at the time discussion of, I mean basically it was some wholesale business. Right. So that was a kind of much lower margin business that would be low single digits. So I mean that, that's not new, that some of this, there would be a margin hit here. I think it's more the idea of the market is getting concerned about, you know, we see tons of just giant deals. To your point, how will they happen? When will they happen? Will they ever reach the promise of these very, very huge headline numbers? And so they're sort of wondering, all right, well, let's see how it actually plays out. We haven't really seen that yet. We do see in videos numbers because that's revenue now, but we don't see yet. They've talked about 3 to 4 trillion dollars over the next few years. We haven't seen that yet. There just seems to be, I think, cracks in the belief that this is going to keep going gangbusters and ultimately it's all going to be worth it. It's not all going to be worth it to everyone who's involved. So I've actually been paring back somewhat on anything that has exposure. I feel like I got to just take some money off.
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Brian Kelly
You were part of that 7% today.
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Karen Fineman
Not an oracle.
- [07:38]
Brian Kelly
Not an oracle. Very mysterious. Seema Modi, it's great to see you.
- [07:42]
Courtney Garcia
Thanks.
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Brian Kelly
Thank you, Courtney. And I think, to Karen's point, I want to be very clear with the audience too. I feel like that a lot of these. We're getting 10 to 15 years of deals announced now. There's no way, and I'm going to just say it, there's no way the pace of any of this can continue in perpetuity. Where I feel like reading all the deals announced now that may drive earnings for years or decades to come. Fair or foul.
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Courtney Garcia
Yeah. And that's what I think the markets are really trying to suss out here.
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Commercial Announcer
Right.
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Courtney Garcia
Because I think realistically you're seeing people are just pouring money into the trade. A lot of people are starting to compare this to the tech bubble because things are starting to get expensive, despite the fact that there's still a lot of nervousness in the markets. But people just want to be part of this trade.
- [08:26]
Dana Telsey
A of lot.
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Courtney Garcia
But at some point in time, I think Karen brings up some really good points here. You want to see that revenue that's actually going to be generated. And so as much as we're optimistic about the demand, can they actually monetize it?
- [08:37]
Brian Kelly
Yeah, that's it. And we'll see. Meantime, Jim Cramer held his monthly investment club meeting and a rather special guest joined. That is Nvidia CEO Jensen Wong. In addition to meeting club members, Wong also talked to Jim about his partnership with, you guessed it, OpenAI. This is a partnership that for the first time, OpenAI is going to buy directly from us. Usually a cloud service provider buys from us and they rent from a cloud service provider.
- [09:09]
Steve Grasso
And so now it's going to be a direct partnership.
- [09:11]
Brian Kelly
We're going to help them build an.
- [09:14]
Steve Grasso
AI infrastructure that they operate themselves and.
- [09:17]
Brian Kelly
Really set them up for, you know, five years out when they're going to operate their own cloud. Anyhow, See, there you go, Tim. He said set you up five years out. Is there anything to what I'm saying or is it just total nonsense that all this stuff that's happening right now is for five and 10 years out? There's no way this pace can keep up. Well, maybe there is.
- [09:39]
Steve Grasso
Not only all we do talk about a bubble. By the way, Ed Yardeni, who's been doing this a long time, I don't know, maybe someone else said this, but he said we have a bubble and bubbles bubble talk, which means actually things are okay. But open air, $1 trillion of deals. As you said, we've put it all on the table now for a company that won't be profitable probably till the end of the decade. The thing around in video is if this was six months ago, one of the questions for investors was what does Nvidia do with all this free cash flow they're generating? How are they going to be reinvesting? Well, there's no question we've gotten our answer in the last couple of weeks. They are an AI infrastructure company and they are going to, they want to be the, the bottom line de facto couple. Great reports out there, one by Piper that, that also headlines this. I think this is part of both the, the excitement and the challenge about investing in, in video here because people have that concern.
- [10:33]
Brian Kelly
All right, so let's stay on that topic because certainly over the last few weeks, folks, everybody and their mother and their mother's financial adviser seems to have started talking about air bubbles, circular money and even the old vendor financing fears from 25 years ago. Now worries about energy. Suddenly the hot new thing. That's great. But your first guest today says you need to stay calm and look through some of the scary stuff. Morgan Stanley Private wealth management executive director and private wealth advisor Katerina Simonetti joins us on set. You know what I mean? Suddenly it's become very in vogue to talk about AI bubbles and the lack of energy. Is a guy that's been talking about it for a while. I kind of like it, feel complimented by it. What are you talking about with clients?
- [11:17]
Katerina Simonetti
However, Brian, thank you for having me on the show. And it's a very fair question because you see this barbell happening with a conversation. On one side you have this core AI names that everybody is following. On the other side is this search for almost the next big thing, this micro caps that is not productive. And I think that the core advice that, that we can give to our clients and investors right now is to Broaden our look at AI. Like just go at it from, you know, 10,000 foot view and look at the companies that participate in the buildup of infrastructure of the data centers. Look at the companies that are going to give us energy, nuclear and these, this more portable type of stations, the anything from wiring to also the key participants and companies that are going to benefit from AI implementation like health care, like financials. And if we look at it that way, that's when they aim. AI story becomes a true story because we compare AI a lot to Internet, but I think it's more like electricity.
- [12:20]
Brian Kelly
Yeah, I, and I love that because I was talking to a former banker today and he made a great point. He was saying basically that we treat AI like a monolithic thing. Like it's like this is AI and everything. No, it's going to be AI for apps for. Everybody's going to be using AI for whatever they do. CNBC will use it, utilities will use it, clothing companies will use it. It'll kind of get spread out. So it sounds like you're saying there's a lot of opportunity all along, sort of that sprinkled margin.
- [12:47]
Dana Telsey
Absolutely.
- [12:48]
Katerina Simonetti
And the key is to understanding AI and understanding the profitability and the expansion of the pricing power that it can bring. So going away from it's the next best thing and accepting it as the key core component of our life, that is not going away, that is going to drive this market to the new levels of growth. So we do not think that we're in a bubble. We think there is a lot of opportunities in the sector. We just need to get a deep understanding of what it is that we are buying and owning.
- [13:17]
Karen Fineman
So when you think of, first of all, thanks for being here, nice to see you in person. When you think about the industries that would be really effective in a positive way by cutting costs, like, like banks or something like that, beside banks, which we can really see the promise there. What are the other types of industries that will really be the beneficiary of the efficiency they can gain?
- [13:35]
Brian Kelly
Well, absolutely.
- [13:36]
Katerina Simonetti
And first of all, I would say probably every industry, right. Like I cannot think of the industry that would not. But the top of mind is health. When we think about the clinical trials that used to take years with AI, right now we can narrow down the list of potential candidates, patients with certain traits, the outcome, they can analyze the data so quickly right now. So things that would take years are not going to be significantly more efficient when it comes to, you know, clothing. Right. Like choosing clothes and styles and you know Figuring out where you.
- [14:08]
Steve Grasso
Or neckties.
- [14:09]
Katerina Simonetti
BRIAN Exactly.
- [14:10]
Brian Kelly
That's a very. By the way, that is a fantastic. Thank you.
- [14:13]
Steve Grasso
So I simulated.
- [14:14]
Brian Kelly
I want to say that is just you have, you have style and class. Steve Grasso Katerina, when you, when you, for clients, when you want to get them out of tech or to more diversified and you talk about utilities or you talk about industrials. Industrials are only 9% of the S and P. So it's hard to get a lot of attention there. Do you get pushback there? Do they want the shiny thing, the new thing?
- [14:35]
Katerina Simonetti
Not at all. It's hard to argue with industrials being up 17% this year. And in our view, industrials not only is a key component of the AI story, but also the buildup of the infrastructure in this country. Our roads, our bridges, our energy infrastructure. I mean everything single thing really relies of us having a strong core industrial base. And again, it's understanding how it really is the glue that ties everything together. And it's also a great defensive sector, doesn't feel defensive at being up 17%, but it is a key component of investment.
- [15:08]
Brian Kelly
But your, your point at the top and I think this is a critical point. I think that there are a lot of stocks that are small caps that are up a couple hundred or a couple thousand percent this year. Nobody had ever heard of them before five or six months ago. They got AI in their story now. And I think is it investors, is it gamblers? I don't know, but I feel like there are a lot of stocks or companies that may not be around or what they say they are in a couple of years. Is that a fair statement?
- [15:41]
Katerina Simonetti
That is an exact fair statement. Because the first thing we explain to investors is the core difference between gambling and investing. And we want to understand at all times what it is that we own. The competitive advantage that company has, the possibility for the growth, the free cash flow that it brings. How exactly how it can benefit from AI just having AI in the name of the company or having it loosely affiliated or something that somebody next door tells you like the next thing absolutely has no role in the portfolio. If we don't understand what it is that we own and the possibility in the future and exact positioning of the company, it has absolutely no role in anybody's investment.
- [16:20]
Brian Kelly
Katerina we're going to say thank you. You should just capitalize the A and the I or one of them in your name and then you'd have that because you can't spell Katerina without AI. Katerina Simonetti.
- [16:30]
Steve Grasso
Thank you. See what he did there? It's pretty good.
- [16:33]
Brian Kelly
I'm not bad. I mean, I know this is what I, this is what I do. I think the point is well taken. I hope, Courtney, that just, I, I would imagine you would agree. Be careful out there. There's a lot of money going to a lot of things. That's gambling. It's not investing.
- [16:48]
Dana Telsey
It is.
- [16:48]
Courtney Garcia
And I think you're really seeing this over concentration right now. The more it happens, you get this like fear of missing out. And this is one of the most concentrated markets we have seen since the tech bubble. So it's not that this can't continue to run, but it is just a good reminder to clients like start to take some profits, broaden out your exposure. So I don't want to get out of the names. You just don't want to be overexposed because maybe Oracle is a crack. I mean at some point if you're going to see a pullback, you just don't want to have everything all in one.
- [17:13]
Brian Kelly
Yeah, well, my partner's and Oracle's and Microsoft's, whatever they are, they're, they're the, they have real earnings. There's a lot of small cap companies that are up 1000% in a year. No one's ever heard of that. Make sure what's a good way to do it. Make sure they have free cash flow, make sure they have sales. How do you screen for companies to make sure that they're, they are what they say they are?
- [17:34]
Courtney Garcia
Yeah, and I think that's where it's tough in small caps because a lot of small cap companies aren't profitable. And especially in a market like this where you look at those valuations, that does get tough. And I think making sure you're well diversified. So if you have some of those in there also have some more profitable companies that will offset that risk. I think that's how you want to.
- [17:48]
Brian Kelly
Quote the great Tim Seymour last week. I don't even know why we're talking about small cap.
- [17:52]
Steve Grasso
Well, that was, you know, again, that's mean spirited, Tim, sometimes. But I think the conversation we are having about the broadening both of the market and the margin profile of, you know, kind of old economy sectors. We had a fascinating conversation about utilities and you know, an industrial analyst from bank of America who has been in the middle of the old stodgy industrials for a long time, couldn't be more excited, is also covering names that are the key part of the data center play. What we're going to see, what We've already started to do this for banks. We've started to do this banks because essentially Fintech and because of efficiencies that had to happen anyway, because of blockchain, because of digital. This is the part of the economy. And as Katerina pointed out, industrials had outperformed the S and P for most of the year and probably still are by a small amount. So it's not as if they weren't part of this trade. I think the message for investors is look for valuations that make sense, look for companies you can go to sleep on, and look for companies that I think are interesting to buy here.
- [18:49]
Brian Kelly
All right, well said. Meantime, President Trump making more headlines. He met with Canadian Prime Minister Mark Carney today. And like we do tend to get from the White House, there was more behind the story. Amy Javors at the White House with details.
- [19:02]
Eamon Javers
Eamon yeah, Brian, it was really a convivial atmosphere inside the Oval Office here for the two countries which have really had significant tensions during the course of the year over trade and tariffs. And of course, the president's comment that Canada should become the 51st American state, you know, the Canadians did not like that. And there's been real popular upset in Canada over all of the US Attitude toward that country. But today, you know, you wouldn't really pick up on much of that. Both leaders very much making an effort to paper over some of that disagreement. And the president in the Q and A session here making a comment that I think really goes to his frustration about global trade and why he's pursuing the tariff course that he's pursuing. Here's what he said.
- [19:48]
Steve Grasso
We're the king of being screwed by tariffs.
- [19:51]
Brian Kelly
Just so you understand. And I'm not talking about with Canada.
- [19:53]
Steve Grasso
I'm talking about with countries all over the world.
- [19:55]
Brian Kelly
When you look at Europe, when you look at China, when you look at all of the almost every country charged.
- [20:04]
Steve Grasso
The U.S. we didn't charge them.
- [20:08]
Eamon Javers
Brian that kind of sums it up, right? The president's attitude is that his tariff agenda is a defensive one, and the rest of the world might see it as offensive, but he feels that countries have had tariffs in place against American goods for a long time and he's simply sort of righting the ship in terms of making that tariff back and forth a little bit more even. That's why he says he's putting in the tariffs. And Mark Carney here saying that he's going to make the best deal he can for Canada, but not necessarily agreeing to anything in the room. And Brian. We haven't had any readout from the White House after Mark Carney left a little bit later this afternoon to indicate that anything in particular was agreed to here. But tonally, the this was a better meeting between the United States and Canada.
- [20:53]
Brian Kelly
Nice to see a little peace with Canada. We like, we like our friends, love, we like our friends.
- [20:59]
Steve Grasso
It's more than like, come on, right.
- [21:01]
Brian Kelly
They're going to beat the great tonight. We we like, you know, Eamon Jabber's big fan. Thank you very much. Appreciate that. Go Blue Jays on deck. Oh, a story that came out of nowhere. Why Ford production may be in trouble and it really has nothing to do with Ford. Plus gold soaring. Is 5000 an ounce, 6000 an ounce. Inevitable?
- [21:24]
Steve Grasso
Yes.
- [21:25]
Brian Kelly
Thank you.
- [21:32]
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- [22:08]
Brian Kelly
What advice would you give to young people now trying to navigate this crazy world?
- [22:13]
Karen Fineman
My advice is to pick a time at the end of the day that you declare as the end of your working day.
- [22:22]
Brian Kelly
Because let's face it, there is no end to our working day.
- [22:25]
Commercial Announcer
Julia Boorstin hosts CNBC Changemakers and power players. Listen now, wherever you get your podcasts.
- [22:34]
Brian Kelly
All right, welcome back to Fast Money. A surprise story around Ford involving a big supplier and a fire. Phil LeBeau has more philosopher and there's.
- [22:44]
Phil LeBeau
Two parts of this story, Brian. One is what this fire, which happened at a aluminum plant in Oswego, New York, three weeks ago, what the supplier now having to adjust and what Ford has to do, how that impacts production. Keep in mind that this supplier, Novelis, makes aluminum not only for Ford, but for other automakers and parts suppliers in the U.S. ford, for its part, when we reached out to him today, said we are pursuing other suppliers. Most I've talked to in the industry have said, you know, Ford's going to be able to work around this and in some capacity. You're not going to see F150 production fall off a cliff. What you will see potentially is an impact on the bottom line. Why? Keep in mind that The F series is the number one selling vehicle in the world or in the United States, I should say number one. Selling has been for about 39 years, 800,000, roughly speaking. So you look at that and you say, well, what are they making per truck? Most believe it's between $10,000 and $15,000 per truck. In terms of profitability. If they have to source aluminum, let's say from Europe or from other suppliers overseas, tariffs are factored in. That could potentially have an impact on the bottom line. That's why, as you take a look at shares of Ford, almost everybody I talked with today said, you're still going to see the F150 in showrooms. They're not going to stop production. What you may see when Ford reports its results on October 23rd is potentially some type of an impact on the bottom line. So that's why Ford shares down more than 6% today.
- [24:17]
Brian Kelly
Brian, it's kind of crazy. I mean, how important? I know you kind of laid it out a little bit, Phil, but we're going to have F150s in the showrooms. How significant is this factory? I mean, can they get the aluminum somewhere else?
- [24:34]
Phil LeBeau
Well, they think most believe that Ford will be able to do a workaround and source aluminum from other facilities. Maybe they'll have to do it from Europe and bring some of that aluminum in here. You've got to make sure it's the right specifications, et cetera. That's where the higher costs factor in. It's not that you're going to see Ford say, well, we get no aluminum. We're sourcing from this place in New York. A good chunk of the F150 aluminum comes from there. That's down. Therefore, we're not going to make F150s. Almost nobody I talked with said that's the case. By the way, there are other automakers who are supplied by this plant and I've talked with executives at those automakers and they've said, yeah, it's a challenge. We think we're going to be able to work around this. But they're not as exposed as Ford.
- [25:19]
Brian Kelly
Philibo, Interesting little bit of weird story there as well. Philibo, thank you very much. Steve Grasso, Ford kind of, I mean, out of the blue, the fire. What do you make of it? I always look past these type of issues and I look, I think it's going to be a good year for both Ford and gm. You're not going to have the EV mandates. They both, both lost a ton of money with EVs they're going to be have relief status on tariffs. If you look at both companies, they both perform and I think you're going to perform barring any recession, which I don't see a recession happening. I think they're going to actually make cars and forget the story. Not that, not anything against Phil, but I think, you know, I want to look past this event and look towards a profitable.
- [26:05]
Courtney Garcia
Yeah, I do think those short term it will have an impact because clearly they're going to have to source aluminum from other places. Like the F series for their trucks is their most profitable. But there's a 50% tariff on foreign aluminum. Right. So I mean there's going to be a real impact there if you're looking at getting it abroad. So I think this something they've got to figure out and I agree. I think this is going to be a short term problem. I think they will get this figured out. But that is going to be something.
- [26:28]
Steve Grasso
In the short term in the current market we have with the White House dictating not only, you know, policy that could in some cases. Obviously it sounded with auto tariffs and the tariff dynamic is really auto negative at one point. But now I think support for gm. First of all we talked about the lithium deal but I think for Ford as well. That chart on Ford too also quite interesting off those April lows really back above kind of where it was even before the worst of Liberation Day. Steve's right. In terms of where I think we are for the core automakers both because we're not so focused on EV and what they're not doing. I'd be long for it here.
- [27:00]
Brian Kelly
Have you seen the price of a fully loaded pickup? Yeah, it's 100 grand. It's like $100,000. Yeah. Loaded with what ties.
- [27:10]
Steve Grasso
I mean there's.
- [27:11]
Brian Kelly
Well said.
- [27:11]
Steve Grasso
Yeah.
- [27:12]
Courtney Garcia
Yeah.
- [27:12]
Brian Kelly
Well played for the View if you're on.
- [27:15]
Steve Grasso
Yeah, I think it's. We can.
- [27:16]
Brian Kelly
Tim and I are effectively wearing this.
- [27:17]
Steve Grasso
Never be inside jokes.
- [27:18]
Brian Kelly
You are from the same rack downstairs that somebody left. Yeah, it was a lot more fast.
- [27:25]
Steve Grasso
Sartorial.
- [27:27]
Brian Kelly
It was kind of a split.
- [27:28]
Steve Grasso
Who do you think won?
- [27:29]
Brian Kelly
Karen? We were kind of like you take this one. There's a lot more fast money. Who wore it best? Here's what's coming up next. Gold's $4,000 milestone. The precious metal hitting yet another record today. Can the gains keep glowing, we debate. Plus retail's been in the clearance bin lately. But could a slew of deep discounts help rejuvenate sales and the stocks, how Amazon's prime day factors in and how competitors are trying to keep up. You're watching Fast Money live from the NASDAQ market site in Times Square. We're back right after this. It's Cybersecurity awareness month and LifeLock is here with tips to help protect your identity. Use strong passwords, set up multi factor authentication and report phishing scams. And for comprehensive identity protection, Lifelock is your best choice. Lifelock alerts you to suspicious uses of your personal information and also fixes identity theft. Guaranteed or your money back. Stay smart, stay safe and stay protected. With a 30 day free trial at lifelock.com specialoffer terms apply at Maurices.
- [28:40]
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- [29:12]
Brian Kelly
We gotta talk about gold. Gold crossing above $4,000 an ounce today. For the first time ever, gold has boomed. This year. It's at 4,007 bucks right now. To be fair, gold is not the only metal that is up. In fact, almost all the precious metals are rising. Gold just gets a little bit more love. So everybody, what is next for gold fever on Wall Street? Is there anybody at this table that thinks gold is going to fall?
- [29:42]
Steve Grasso
Well, I think it's important to point out a couple of things. I mean, gold gold Is, is rallied 50% this year. Gold has outperformed the S and P during one of the most bullish moments for the stock market period. On some level that should be concerning. There are drivers for gold. We talk about it all the time to say that 4,000, it's a very big number. Gold sometimes doesn't like big numbers. And we've come a long way. I'm going to tell you that the fundamentals around owning gold and the diversification and the demand side, that's institutional. I mentioned allocations that now include 10 to 20% gold in your total portfolio. It's not a, be careful. It's, we're not going to go up 50% in the next year. I mean, no way. But I'm very long.
- [30:23]
Karen Fineman
I'd rather, obviously it's been great. I'd rather be in bitcoin. That's the way I'm positioned, I sort of feel like all of the macro factors that have made gold interesting are also true for bitcoin and that you have an administration now who's very, very.
- [30:37]
Brian Kelly
Are we playing? Would you rather.
- [30:39]
Karen Fineman
I guess I did pivot it into that game.
- [30:44]
Brian Kelly
Okay, okay, hold on for a second. But serious note, if you're a signet jewelers.
- [30:49]
Karen Fineman
Yes.
- [30:49]
Brian Kelly
This is bad, bad, bad for you, right?
- [30:52]
Karen Fineman
Yes, yes.
- [30:53]
Brian Kelly
You don't want your core commodity costs to go up.
- [30:56]
Karen Fineman
Thank God for, you know, lab created diamonds for them.
- [31:00]
Brian Kelly
No, truly.
- [31:01]
Karen Fineman
Right.
- [31:01]
Steve Grasso
We could make that into a cubic sarcone.
- [31:04]
Brian Kelly
But Brian, if you look at how much the new color. If you look at how much bitcoin is up, Bitcoin's up 346,000% if you start from $35 where we're unpegged to the dollar. Right. So just to make it fair, gold's up 11,000%. Great. Who's buying gold? So you have central banks buying gold. Right.
- [31:25]
Steve Grasso
Pension funds for the first time are making big weightings to gold. I mean, it's a different investor base. And if you think about the story.
- [31:33]
Brian Kelly
Ukraine, Russia, there was a lot of the oligarchs who couldn't get dollars out of Russia. So they, they moved to gold. And it's easier to move gold around. So that started a big bang for gold. But we've been waiting for gold to get to the 5,000 mark for a very, very long time. I'm not saying it's not getting there anything. I love this because I love. Like two years ago we would have talked about bitcoin and gold in the same vein. It was like the kind of prepper, paranoid anti fiat money currency, you know, doomsday or they're buying bitcoin because governments are going to fail. They're stealing your money. Karen, Gold bug was. Now we're talking about people putting gold in their 401k and it's Blackrock and everything else. Yeah. It does feel like switch has been kind of amazing. It has. It does feel like it's a little bit of a tipping point though. With, with gold there was a lot of gold bugs and now there's a lot of retail buying it too.
- [32:22]
Steve Grasso
Gold's outperformed the S and P for 10 years. Okay. And, and if you go back 20, I have the same thing. So I'm just going to say be careful for saying this is a fad. You didn't say. Nobody said that here. I'm just telling you. I think the trends around gold are going to continue. And this has been an outperformance not for one year, two years, five years or 10 years, but longer gold.
- [32:44]
Brian Kelly
Are you guys excited? Because I don't know if you know this, but we're just about two months away from the next Fast Money Live event. It is happening right here on September 11th. Fast Money fans from any and every corner of the globe. Well, corners wrong because that would imply the globe is square. It's round somewhere in the world. You can come. Not many openings left, but we are saving one for you. So scan the QR code on your screen right now or go to CNBC events.com fastmoney to get your tickets. What could be better?
- [33:19]
Steve Grasso
New York Christmas in Times Square.
- [33:20]
Brian Kelly
Christmas.
- [33:21]
Steve Grasso
That's money traders in weird hats. And I mean, right? You know, here's the question because I.
- [33:26]
Brian Kelly
Under the fireplace so. Well, do I get a ticket? You're not comped.
- [33:30]
Steve Grasso
I don't know about that. Brian. You've got to look. It's, there's a, there's a secondary market for this stuff right now. Talk about the squeeze. There's a lot of liquidity out there in markets, period. Get one while you can.
- [33:39]
Brian Kelly
Karen.
- [33:39]
Steve Grasso
Do I get comped?
- [33:40]
Karen Fineman
I think you do, actually.
- [33:42]
Brian Kelly
This is why you're the class of the whole thing. Fast money live, December 11th. It's going to be great. Tim will be in a weird hat. Enjoy. Up next, it is Prime Time. What the big promotional days really mean for Amazon and other retailers. All right, not all good things can last. And yes, even stocks can go down. For example, the S&P 500 today, it broke a seven day win streak. The NASDAQ down about 7. 10 of a percent. Context is key. We opened today higher. So those two indexes actually made another record high today and yet still fell 4. 10 of 1%. One stock to watch, literally. Netflix upgraded to buy its Seaport Research partners with analysts seeing nearly 20% upside from current levels. Netflix already up nearly 34% this year. And maybe you buy stuff while watching stuff. Well, Amazon certainly hopes so. And it's kicking off its big deal prime days tomorrow with Wal Mart and Target holding their own sale events this week. Target obviously the notable underperformer of the group, down more than 30% this year. And announcing a CEO change. Let's bring in a retail analyst that knows or has forgotten more about retail than most of us have ever known. That is Dana Telsey, Telsey Advisory Group CEO and Chief Research partner. How was that for an intro?
- [35:22]
Dana Telsey
Thank you very much. Absolutely thrilled to be Here.
- [35:25]
Brian Kelly
Well deserved.
- [35:25]
Steve Grasso
Great to have you in person.
- [35:27]
Dana Telsey
Thank you.
- [35:28]
Brian Kelly
Does this. Okay, where do we start? Should we start with Target?
- [35:31]
Karen Fineman
Sure.
- [35:31]
Dana Telsey
There's a lot of work to do. They're coming to my conference tomorrow. You have a new CEO that's been appointed, promoted from within.
- [35:37]
Brian Kelly
You've got to which people didn't like by the way.
- [35:39]
Katerina Simonetti
Right?
- [35:40]
Brian Kelly
Well, they wanted like some slick outsider that might change things, right?
- [35:43]
Dana Telsey
Well, you need change. You look at the results lately, you need change. We have to see what that change is going to look like, especially when you have so much competition, whether it's from the off prices. You've got Amazon Prime Day today. Early indications of search interest for Amazon Prime Day. Pretty good traffic up nearly 20% which is a big number.
- [36:02]
Karen Fineman
So for Walmart and Amazon, do you feel like this is a, this is sort of theirs to lose?
- [36:09]
Dana Telsey
It is. When you think about Walmart and frankly the share that they're gaining, Amazon, the ease with which it is, there's definitely share to gain and especially what you're going to see during this holiday season because we all know that these tariffs, price increases are coming steadily, not all at once. So where's the share going to go? It's going to off prices, it's going to Walmart, it's going to Amazon. We have to see what those companies that are enacting change, what can they deliver? That's exciting.
- [36:37]
Courtney Garcia
There's been a lot of concern with the consumer. Look at consumer confidence. Clearly that mean that has been much lower than people expected. But it has not translated to retail sales. Like people are still spending. So how do you look at that when you look at retail over the next quarter or the next year here? Like are people going to keep spending or at some point are they actually going to pull back because their confidence.
- [36:55]
Dana Telsey
Well, I think you definitely look at it by income level. You certainly seeing some of the lower income levels trade down and trade down, whether it's to the off prices or to the discounters. We've seen the luxury stocks and we'll hear about it next week from LVMH where luxury has been slower given the price increases that have taken hold so many times. But overall for this upcoming holiday season, it's an uncertain time. It certainly still feels like you're going to have at least a low single digit increase, a lot of it boosted by those price increases and inflation.
- [37:24]
Brian Kelly
Dana, when you look at this type of year it makes me think inventories, who's managed their inventories the best, who's tried to get around tariffs and when I think about inventories, I think about TJ Maxx and Ross stores. Is TJ Max going to continue winning? Why do they do it better than everybody else? And why would you buy anything else if you've had that tariff monkey wrench thrown into the system right now? It seems like that's the best way to play going into the back half of the year.
- [37:51]
Dana Telsey
I think there's a lot of different ways to play. You can look at brands and who's doing new things in brands. Look at the strength of a Birkenstock. You look at TJ and the category diversification that they have with the buys that they get because of the relationships with vendors and brands. They get better deals because of where they can distribute their product through their own and basically their own umbrella because they're lower priced than a lot of the department stores and other players out there. TJX is a winner. I think it continues to win and I think off price overall. Let's see Burlington's comps too.
- [38:22]
Steve Grasso
Dan, it's shocking to me that this is the start of holiday shopping. But if is it?
- [38:26]
Dana Telsey
Well, it is.
- [38:27]
Steve Grasso
I mean she's.
- [38:28]
Brian Kelly
It's the Monday songs and if not there should be.
- [38:32]
Steve Grasso
You're the guy to write them somewhere.
- [38:33]
Brian Kelly
You're the man to write.
- [38:34]
Steve Grasso
He's not happy that we're having this con. He's, he's, he's a grouchy guy. But, but ultimately what is your sense of this holiday season and weave in the fact that this is an extended season that's going to be tough to read. We have a consumer that might be tapped out, but we have promotion, promotion, promotion. And that to me says margins don't sound as if they're going to be as robust as we want.
- [38:54]
Dana Telsey
Well, third quarter is going to be tough on margins. We know that's a tougher quarter. And fourth quarter, is it going to be promotional? It always. There is a level of promotion out there but those inventory levels, people wanted to bring in the lower cost goods and those companies that for discretionary where there is newness, they'll be buys. You look at Levi's. We're going to get their earnings tomorrow night. Beyonce helps. Wide leg denim jeans.
- [39:15]
Steve Grasso
Wide leg denim. Steve.
- [39:16]
Brian Kelly
I love it.
- [39:17]
Dana Telsey
It's hot. It's working. It's selling through totally.
- [39:20]
Brian Kelly
American Eagle.
- [39:21]
Dana Telsey
American Eagle.
- [39:22]
Brian Kelly
Is that working? Because I don't know if you heard about. There was a little bit of a blowback on some of these ad campaigns.
- [39:27]
Dana Telsey
A million new customers are attracted to their denim jeans but because of the.
- [39:30]
Brian Kelly
Ad they got pushed back on.
- [39:32]
Dana Telsey
But yes. And it sold through. You take a look at Abercrombie to look what they just did, an NFL partnership. So these partnerships make a difference brands in attracting people to the brand names. Everyone's got to do something new in order to win. Unless you're a Walmart and Amazon or a tjx.
- [39:48]
Brian Kelly
Are we supposed to like get gifts for Prime Day now for.
- [39:50]
Steve Grasso
Well, you're supposed to get a new necktie tomorrow.
- [39:52]
Brian Kelly
Okay. Anybody who says necktie. Okay. Tie just sounded necktie.
- [39:57]
Steve Grasso
Yeah.
- [39:58]
Brian Kelly
And I can wear that with my shirt.
- [39:59]
Steve Grasso
That's a good comeback.
- [40:00]
Brian Kelly
Chapeau.
- [40:00]
Steve Grasso
All right. Nice.
- [40:02]
Brian Kelly
And your slacks, sneakers. Dana Delsey, thank you very much.
- [40:06]
Dana Telsey
Thank you.
- [40:07]
Brian Kelly
Coming up, the Wall street call putting the home builders on a bit of a shaky ground today. That's next. All right, welcome back. Maybe your call of the day was not on home builders or at least not in a good way. Research firm Evercore downgrading the entire home building sector saying President Trump's policies are not helping it. Six stocks cut to from outperform to in line basically kind of a hold. Analysts arguing the administration has been more focused on increasing housing supply to try to bring homes down or prices down rather than stimulating demand by lowering mortgage spreads. The X H B that is a big homebuilder ETF down two and a half percent today, trading at two month lows. Steve Grasso, any reason to, to, to go against this call and buy them? I think you could buy homebuilders but you do need rates to come down precipitously that we've talked about this. How many people, 80% of people have a mortgage below 6%. So that golden rate is five and a half percent. You have to get rates down. I bet you your mortgage is probably three and a half Savvy guy. A lot of people have that three and a half mortgage during COVID where they, where they refinance. So it's very difficult to really inspire people to get out and buy homes. But I think there's a lot going for. You have immediate expensing, 100% expensing. You have a 21% corporate tax rate. So there's a lot of things that are going for this group. You just need the jobs market to stay intact and the housing market will stay intact as well.
- [41:48]
Karen Fineman
Some of the costs though have gone up. So and we haven't seen that much needed lowering of you know, 30 year mortgages. A little but not really a although.
- [41:57]
Brian Kelly
This group I think can to some extent self Finance. Right. They don't. You don't need. Sometimes they can run specials. Kind of like the retailers mean, the home builders. Yeah, we just talked about it with Dana Telsey. On a large, you could do that, no money down. Or you could make the house slightly smaller, make it a little bit cheaper to build it. They have tools they can use that a quote existing home can't.
- [42:19]
Steve Grasso
Speaking of just the way you invest in homebuilders, I mean the xhp, it's fascinating to me is how this ETF has actually changed components. If you look at the top 10 names in the XHP, the bottom three are Pulte, KB Home. But you know, up there. And this is gets back into the conversation we were having about Datacenter and some of the infrastructure. But train carrier, these are big H vac plays. This is a big part of that trade. And if you look at the xhp, it's interesting because the ETF is kind of evolving with the sector. The actual homebuilders are not even the biggest weights anymore.
- [42:48]
Brian Kelly
I love that. Know what you own?
- [42:51]
Steve Grasso
Sure. Look under the hood, Brian.
- [42:53]
Brian Kelly
Coming up, stocks today overall in the red, at least at the end. But one group bucking that trend. We'll talk about the staple stocks that led the charge actually to new records earlier today. Stick around. All right, one bright spot in today's overall drop again. Markets hit new records at the open and then fell. Was the consumer staples sector. The group leading the S and P today. It was up about 1%. You had stocks Estee Lauder, even Ken View, Rose today, Kroger, Colgate, Palmolive, all leading the charge. Tim, you flagged the group for us. Why?
- [43:35]
Steve Grasso
Well, it's a combination of. It's inversely correlated or typically is. It's defensive at a time people are very worried about valuations. What I'd say about Staples overall is the group as a whole is not necessarily cheap. In fact, you can look at names in there that I think are relatively expensive. And there are names that still are trading at a multiple coming out of COVID I mean, some of these names, whether it was a Hershey's or some of the. The other snack food players were really trading in a world where I thought they had the perfect storm of margin accretion, pricing power. Those things don't exist. I'm not telling you to go out and buy Staples. I'm telling you there are opportunities in there. And I get back to some old favorites. Coca Cola has been a stock that I've owned for five years and I Expect to own it for another five in terms of how they've reinvented themselves in terms of their their carbonated traditional CSD business but also the alternative drinks, vitamin waters. And I think there's a lot of growth there relative to itself.
- [44:28]
Courtney Garcia
Yeah and I think you're really going to see this whenever you have these down days in the market. You are starting to see people rotating outwards and especially you're seeing people trying to look for in income. Right. I mean when you look at the SB500 it doesn't pay very much income right now, which long term is actually dividends tend to be one of your biggest growth drivers when you're looking at longer term investing. So I think you're going to see some of that. I don't know for the end of it yet, but I think you're going to continue to see some rotation. Any of these down days you get just like this.
- [44:52]
Brian Kelly
All right, the show is not quite done. Up next, you know what time it is. Final. That's it. Final trades next. Tim, your final trade.
- [45:11]
Steve Grasso
I'm going to get myself a new necktie and I'm going to treat you to one. Brian. In the meantime I should have been listening to Karen all these years on Johnson Controls key part of that data center trade, electrical components, etc.
- [45:21]
Brian Kelly
Karen.
- [45:21]
Karen Fineman
Oh, you're nice to say we talked about this a lot last week. Pph, this is etf. Big Cap Pharma. I like it. I think this value in this space more to you.
- [45:33]
Courtney Garcia
The homebuilders downgraded and everything was down. I don't think you want to throw out the baby with the bathwater. I think Toll brothers want to look at which has the wealthier consumer. They're more likely to buy in all cash. I think if you want to be in the space, that's where you want to be.
- [45:44]
Brian Kelly
Okay. Big tubs too. Steve. Big IBM. IBM is a quiet way to play AI and a quiet way to play Quantum and never gets credit. IBM. Fantastic. Thanks for watching everybody. Thanks for watching. Hopefully Melissa will be back tomorrow. Mad Money starts now.
- [45:58]
Commercial Announcer
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- [46:41]
Brian Kelly
Month and Lifelock is here with tips to help protect your identity Use strong passwords, set up multi factor authentication and report phishing scams. And for comprehensive identity protection, Lifelock is your best choice. Lifelock alerts you to suspicious uses of your personal information and also fixes identity theft. Guaranteed or your money back. Stay smart, stay safe and stay protected with a 30 day free trial@lifelock.com Specialoffer terms apply.