← CNBC's "Fast Money"
CNBC's "Fast Money"
Rates Spike As Equities Stall… And Palo Alto Networks CEO On AI Cybersecurity 3/24/26
00:43:32
Yields spiking after today’s treasury auction showed weak demand, as stocks failed to build on yesterday’s momentum. Why a top market strategist says bond market investors are in “bunker mentality” right now, and why he’s alarmed at today’s showing. Plus KB Home reports results, how an updated Claude Code could reportedly be gaining more control over your computer, and Palo Alto Networks CEO on the rise in AI threats and the step up in security holding them back. Fast Money Disclaimer
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Edward Jones Narrator
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. EDWARD Jones, Member, SIPC oh, could this
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Shopper 1
vintage store be any cuter?
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Melissa Lee
Right.
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Jennifer
And the best part, they accept Discover.
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Shopper 1
Except Discover in a little place like this? I don't think so.
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Jennifer
JENNIFER oh yeah, huh? Discover's accepted where I like to shop. Come on, baby, get with the times.
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Shopper 1
Right, so we shouldn't get the parachute pants.
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Jennifer
These are making a comeback, I think.
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Discover Card Announcer
Discover is accepted at 99 of places that take credit cards nationwide. Based on the February 2025 Nielsen report.
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Melissa Lee
Live from the NASDAQ markets out in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. The great rate spike. Yields rising across the board. The two year closing in on 4%. What is driving the moves and what's it mean for the rest of the market? And crude realities. Oil prices taking a leg lower in just the last hour on reports of a cease fire in the Middle East. Can a truce hold? And can prices go lower from here? Plus, Ralph Lauren gets an upgrade on Wall street, the latest on the weight loss race from BMO's metabolic health conference and and a rough day for software names like Palo Alto. We'll hear from CEO Nikesh Arora on why the sell off may be overdone and how the cyber industry can navigate the constantly changing landscape in the face of AI. I'm Melissa Lee, come to you live from studio BE at the nasdaq. On the desk tonight, St. Brasso, Karen Feiderman, Dan Nathan and Guy Adami. We start off with yields ripping higher after a rough two year treasury auction this afternoon. Rates on short term Treasuries getting close to 4% on a very weak demand. The damage spilling into longer term rates as well. The 30 year getting oh so close to to 5%. Meanwhile, the yield curve flattening again. And the latest sign that investors are growing more concerned about the state of the U.S. economy. Amid all of this, markets now pricing in a more than 6% chance of a rate hike as soon as April. Rate hike. I said how concerned should we be about these moves?
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Mike Schumacher
Bond markets should be concerned without question. The auction was awful. One of the worst ones we've had in a very long time. In a long time. I mean decades I think. And in terms of 10 year yields, I don't think it's coincidental. I mean look at where 10 year yields got up to today. I think 443, 444. And that coincided with the announcement that there Pete's talks coming later in the week. I think we've said this a number of times, the administration might be focused on the stock market, they're laser focused on the bond market and right now it's going the wrong way.
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Melissa Lee
Well that's the thing. They're telling two different stories. So which one do you believe?
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Guy Adami
Well, here's the deal. I mean the 10 year has not had that much of an impact on equities. If you think back the last time was at four and a half. Let's just say we're right there. I mean the S and P was much lower. Right, right. So if you think about where we are right now, you know, we went from rate cut expectations and a bunch of them, I guess over like an 18 month period and now you have this chatter like I just mentioned about the potential for rate hikes. So the problem to me is more inflation, it's more a weakening labor market, it's more the strength of the dollar of late. And you know, you think about s and P500 earnings, you know it's still very, very concentrated among those top 10 names that are concentrated from a market cap standpoint. If you start to see a deceleration, that earnings growth then you probably have a problem for the rest of the 493 and you think about the performance then of those names. Investors are kind of telling you that they're expecting some form of deceleration. Now on the flip side, the more cyclical parts of the market, we've already seen huge moves in industrials, we've seen huge moves in energy, that sort of thing. So I'm just bringing it back through the lens of the stock market. I mean I think the market's okay with yields around here. But the guy's point, you start getting a four and a half on its way to five. That's when you really start to call into question I think valuation, the equity market.
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Karen Feiderman
So I agree with you everything half
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Michael Schumacher
so
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Karen Feiderman
I know, so I do agree that four and a half on its own face is not necessarily a bad thing. It is earlier last year, a couple of months ago it was four and a half on a way to a really robust gdp. And things are Going well. And the economy was really expecting sort of some extra juice from deregulation. One big beautiful bill, all of that. Now it's four and a half because are we in a stagflationary environment?
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Discover Card Announcer
Right.
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Karen Feiderman
We have some not great labor numbers, not terrible, but. And then we have inflation. Not great. And then you throw this grenade into it of what's happening in the Middle east, then it gets sort of scary, I think. I mean we saw if we'll get to it later or not. KBH just. Yeah, this is really not good for the homebuilder situation. I know they really want to make homes more affordable. This, this is not good. So all in all, I don't think the market did terribly, I guess. Do we have to wait till Friday to see what the present is or do we know what the present is?
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Deirdre Bosa
I don't know.
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Melissa Lee
It's a very good present.
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Karen Feiderman
I don't know if it's Hormuz present. I don't know. Giant bow on the Strait of Hormuz.
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Melissa Lee
Something gold.
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Karen Feiderman
A gold bow?
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Melissa Lee
Yeah.
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Karen Feiderman
I don't know. But I mean it's so many rumors flying around the market could change on a dime. I'm hesitant to trade around it because I feel like I could just be, you know, struck on the other side.
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Dan Nathan
Well, that's what happens with the market. Right? The market rips your face off when you think it's a sell and we're going to collapse. It rallies back the next day aggressively. The bond market can do what the bond market does. The Fed is no way know how going to raise rates. So I feel like whenever I say stuff like that, you got to save the clip because then it's going to. It's going to be egg in my face. But I feel pretty confident that 99.9% confident. Jerome Powell said as much the other day. They're not even thinking about raising rates. So that doesn't stop the 2 year and the 10 year from rallying. Bond markets can do that. I don't think the bond market is acting on the Federal Reserve inspired rate. It's acting on a supply shock. We are not nor do central banks make a history and a correct history of raising rates into a supply shock driven inflation. So I don't think that's going to happen. Earnings estimates have been going up, not down. So I think the market can do something and the bond market can do something.
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Melissa Lee
Here's what I don't understand though. We live in a global world still as much as we want to nationalize things and Nationalize manufacturing. Other parts of the world are feeling the impact of inflation very severely right now. Eurozone PMIs 10 month low. We had UK factory prices indicating cost pressures they haven't seen since 1992. We companies here get earnings from overseas, right? Asia, India, I mean all parts of Asia, Europe, all these places feeling severe inflationary impacts. So when are we going to see the impact on earnings? We say earnings are fine, but isn't this sort of a drag?
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Dan Nathan
I think it takes a little. Your premise makes 100% sense, but I think it's going to take. Then you have to talk about is it a four week one, four weeks, Right. So is it a four, is it a four week disruption or is it a four month disruption? So I think those two things are two totally different.
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Mike Schumacher
It's, you know, for, for the longest time companies be able to pass on their costs to the consumer, I don't think. And over the last few months you've seen that they can't do it anymore and stocks are acting in kind. So, so I get the, I get the energy prices, but this was, the things that are happening now superseded what happened four weeks ago now. This sped it up without question, but we were headed this way anyway, I believe. And global yields going higher are a function of a lot of things. Part of it, yes, what's happened in the Middle east, but a lot of it, not what's happening in the Middle East.
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Melissa Lee
The ECB vice chairman was talking today about how they have to be vigilant against inflation. And that implies hikes. I mean that's a, that's a lift to global yields right there if they do.
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Karen Feiderman
Yeah, that'll be, that'll be difficult. I mean they're in a tough spot though. I just want to add that the dollar rallying does work against what you're talking about with, you know, to the extent that we're importing, that sort of helps us a little bit. But I don't think things are titrated so close. Things are just kind of trading a little bit crazy because it's a really volatile world.
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Melissa Lee
Right?
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Guy Adami
Yeah. I think it's important to note though, prior to Covid, I mean we were worried about deflation. Right. Like that was a big concern. Right. And so we think about it now. I mean the tables have just turned dramatically. And so that 2% target, that's fine. We get the 2, 4 to 5, it's fine. But it's the cumulative nature of this inflation that we felt over the last five years or so. So you know you can talk about, you know, what the impact is to a consumer if they have to absorb higher input cost, even if it's for three months, six months, nine months. I mean, you know, we keep hearing about this, you know, return environment, the tax return environment, but no one talks about the higher cost of health care that a lot of folks are seeing. The higher cost, you know, gas at the pump. A gallon is not going back to 290 and like anytime soon. Even if we had some sort of, you know, agreed upon cease fire. Because to your point, the question of whether or not it holds, likelihood of it holding is probably not great. Right. So there's going to be a risk premium that's going to be built into, you know, crude oil. And then when you think about the disruption, like you're talking about, it's not just around the world. Right. But we also have disruption about fertilizer and these other things and. Yeah, and the lead times for this stuff, it's long. So you disrupt supply chains like this. We felt this during COVID You have the chip shut off. What does that mean for auto manufacturing? What does it mean for consumer electronics? I mean, and I'm not trying to sound so fearful, I mean, this is table stakes. This is what happens.
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Dan Nathan
I think you, if you, if you
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Guy Adami
cut off, no, go for it.
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Dan Nathan
So I think you bring up a good point. Maybe the market's looking at it through that prism, saying in 2022, CPI was 9%. In 2022, gas was over $5 a gallon. So, and it fell pretty, pretty quickly and we've recovered. So maybe the market's looking through this now as a point of reference, maybe. Right. It's a shorter term event and different table set than it was then.
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Melissa Lee
We do have some breaking news we want to get to. Jurors in New Mexico just ruled that Meta violated state law and ordered the social media company to pay $375 million in damages, far below the 2 billion the state was asking for. The case was brought by New Mexico Attorney General Raul Torres and argued that Meta and CEO Mark Zuckerberg violated the state's consumer protection laws and misled the public about the risks for young users, mental health and the threat of sexual exploitation. Meta responding to the verdict, saying, we respectful disagree with the verdict and will appeal. We work hard to keep people safe on our platforms and are clear about the challenges of identifying and removing bad actors or harmful content. We will continue to defend ourselves vigorously and we remain confident in our record of protecting teens online. We've reached out to the plaintiff's attorney in the case. We'll update that to you when we have it. Right now, chairs, not really moving on the back of this. Obviously there's still, it's a fluid situation with the meta appealing, but this is just sort of one case that yeah,
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Karen Feiderman
I actually see the shares higher now. I think there's something to it just, just taking away any of the fundamental issues there. Just what does it do for the stock? A certainty.
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Melissa Lee
Right.
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Karen Feiderman
An amount of a worst case scenario of a relatively small, a huge amount of money. Small amount of money for Metta and stocks a little bit higher.
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Melissa Lee
All right. Our next guest says the weak two year note auction reflects a bunker mentality among investors. Mike Schumacher is head of Macro Strategy at Wells Fargo Securities. My great to see you as always. So why are bond investors in the bunker and stock investors are like out walking the streets having fun? You know, I mean like there's such a going out, right?
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Michael Schumacher
Yeah, great question. I think on the bond side, people don't even know what the Fed's next move is going to be. It's not like we're debating 25 or 50 basis points of hikes or cuts. It's hike or cut, can't tell. So it's really not a great environment to buy a really short term treasury security. I think it's got people spooked, frankly.
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Melissa Lee
Why do stock investors, you think, not care that the next move is, is a coin toss? Almost.
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Michael Schumacher
Yeah. It's interesting when you think about the idea of the equity market maybe not getting support out of the Fed, perhaps people are saying, well, got a bit of inflation, that's pretty clear. It's going to be here for X number of months. It's not automatically bad for earnings. So earnings typically do well in inflationary environment. So I think you've got some support there on that side. Built in bond people don't have that. So I can understand a bit of a disconnect that.
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Mike Schumacher
Does it even matter what the Fed does at this point? The market's been raising rates for him. We talked before the show. That two year auction was a disaster.
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Michael Schumacher
In a word, the 30 year mortgage is what, 640, something like that now? So the market's been penalizing the economy quite a bit. The Fed always matters. But right now in particular, can the Fed really do anything? Would it want to? I doubt it. You've got a new chairman coming in, whether it's in a couple of months or maybe three or four months, who can say? Exactly. But it's really difficult to Imagine the Fed doing anything different for a while. So I think it's on hold. It matters, but it's right now it's kind of stuck.
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Guy Adami
Yeah. So Mike, you just mentioned like corporate earnings in inflationary environment usually do pretty well. But what do you think of the backdrop? And Karen used the word before, it's stagflationary. You know, we have a weakening labor market, we have higher interest rates. You know, we have a scenario where, you know, inflation and the higher input costs for consumers that are two thirds of the GDP are really likely to have an impact. I mean, is it, you know, is it a scenario where when you do have weakening growth, maybe it's not great for equities in an environment where, you know, a lot of people think that this is just a hiccup on the way to getting back to a bull market and it probably is because that's the way it goes. I think at the lows yesterday, the S and p was down 8% from its all time highs. And every year on average we have about a 10% decline. We haven't had one since last April. So I'm just curious where you think about like what does a stagflationary environment look like? And I suspect you think it's not great for risk assets like stocks.
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Michael Schumacher
Stagflation would be terrible. There's just no getting around that. But the question is, are we there yet? I would say not so. So we're going to see high inflation for a while. There's damage built into the system. You mentioned 2022. Yeah, we got through it. How did the S and P do that year? Down 20%. How the bond market do? Maybe down 15. Nothing one. So that was a very bad, pretty recent example. But a stagflationary environment is just all around terrible for risk assets and not very good for fixed income. But it's a timing thing, I guess it always is in markets. But still, how quickly do we go from this is kind of uncomfortable that it's a full blown stagflation. I suspect it's another quarter or two, not yet.
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Karen Feiderman
So just to get to the stagflation, beside the definition, what really is stagflation? What's enough growth to sort of stay out of the, the stag part but still have deflation? Where can we sort of be okay?
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Michael Schumacher
I think if you saw 1% growth, that's going to feel pretty bad, doesn't have to be negative, sort of a tipping point, but anything below one in the US that'll be pretty grim. I would say for the outlook ahead.
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Dan Nathan
So when you, when you look at the overall market and you look at the Fed's choices, and I think you touched on this in your opening remarks, there's really nothing they can do at this juncture right now.
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Melissa Lee
Right.
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Dan Nathan
There's no good choices that they have because they don't have anything in their toolbox to help what they perceive as the supply shock. And when you compare, when you said it's really not 2022, what is your best comparison to that? Where are you looking? Through the end of the tunnel?
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Michael Schumacher
Yeah, right now I'd say as far as the Fed goes, Agreed. No good choice. So the best choice for the Fed, frankly, is sit and wait, get more data, get more information. The Fed isn't really compelled to act right now. It doesn't have to. Why should it? What the Fed can do on the margin is keep liquidity in the system. So this is kind of our keen. The Fed's buying a bunch of T bills, it props up liquidity. Why slow down? There's no reason to. So keep that going. Do things like that that are pretty simple, but don't change the policy rate until it gets more data. So as far as a comparator, there's not a great one. You can look at a number of historical examples which are fairly dark, I'd say, and there's really not one that fits perfectly. So I think right now we can't even say exactly where this is going. Got to wait another month or two probably.
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Melissa Lee
How do you look at the inflation impact that is happening right now and very sharply around the world because of higher oil prices and higher other input costs related to oil and, and how long the US can remain insulated from those drags around the, around the world in different economy.
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Michael Schumacher
That's a huge point, Melissa. When you think about the European data already looking a bit worse, whether it's in the UK or the Eurozone. Now, most people have talked about probably many times on the show already. But you think about the US energy status, it's basically flat as far as energy export import, not true in Europe, so much more reliant on imported energy. That's the first key point. Second thing is when you think about how the policymakers actually are incented to operate. The European Central bank is very different. It has only an inflation mandate. The Fed, as we all know, has two mandates, full employment, stable prices. So the Fed can say, well, might be a growth impact, might be a bit of inflation. We can wait on the European side, they can't they're not supposed to do that. Bank of England's a bit different. But the big difference really is you've got an energy, I wouldn't call it superpower, but at least pretty self sufficient country here. And it's simply not the case in Europe. So they're really feeling the pain first and foremost. But we'll get that. It's a global market for energy and other products that'll find its way over here, but not as acutely.
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Mike Schumacher
So to go to the basically unanswerable and unfixable stagflation, it's an employment thing that needs to kick in. What is the unemployment rate need to look like to sort of get your antenna up on the stagflation front?
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Michael Schumacher
I'd say probably high force. So 4 7, 4 8, something like that. If you get something in that area, then people at the Fed and other central banks are going to say, ah boy, we really need to do something to step in and help that out.
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Melissa Lee
Going back to my question though, not just the oil markets. When will we start feeling it in earnings? We're, you know, exporting goods or services and people are not buying or corporations are on hold because the inflation outlook there is much worse, whether it be in Europe or in parts of Asia.
- [18:21]
Michael Schumacher
I would imagine it probably starts to crop up in the next quarter or so. I mean some of these input costs have gone up hugely. Diesel's up what, 2/3, something like that since the attacks began. That's going to flow right through the system pretty fast.
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Melissa Lee
How are you feeling about the markets now? I mean, you've given us a lot of information, but what's your sort of feel? I mean, it was interesting to hear Mike Wirth, the CEO of Chevron yesterday saying that the market, the oil markets at least are not looking at what we are looking at. We actually see a much tighter market than what the markets are seeing. I mean, how are you feeling about what the equity markets are pricing in when you take a look at the risks around the world?
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Michael Schumacher
Yeah, I mean I mentioned a couple of minutes ago I can understand to some degree a disconnect between stocks and bonds, but not entirely. So the bond market's telling a story that we're all very nervous. The equity market, as you said, Melissa, seems to be partying in the streets and that can go on for a while, but eventually the hangover kicks in and the party ends. Right. So I'm not quite sure when that happens, but Is it another 25 basis points in short term rates? Is it 50. It's hard to tell what that tipping point is, but, but it can't be infinite. So get a couple more bad bond auctions or some bad inflation prints and I suspect people in equity land finally do get nervous.
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Melissa Lee
Michael, great to see you. Thank you for coming by. Michael Schumacher. It's amazing to think that a month ago the two year auction was offered at 3.9 something percent. I mean it was. It's a hugely different story four weeks later.
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Mike Schumacher
And, and I think the hope is if this war gets rectified or some sort of cease fire that will abate. I'm not convinced that's the case again. I think things have definitely been sped up over the last few weeks, but I think this has been inevitable all along.
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Melissa Lee
Are you feeling like we should be in the bunker?
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Karen Feiderman
No, still on the street.
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Melissa Lee
You got one foot in, one foot out.
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Karen Feiderman
You know, I'm looking at the VIX again, just under 27. I don't think that's where it should be. And it'll either be higher or lower. I suspect higher first. But I'm not, I'm still, I'm long. I am always long. It's been a painful four weeks, but I'm not, not going in the bunker.
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Guy Adami
Selling it's painful because there's stuff under the hood that we've been talking about like software today, the way that it got sold again for no real apparent reason. You know, we saw weakness out of these alternative managers. But I think with the S and P, you know, down 4 or 5, it's down what, 4% of the year? Down 5, 6. I think this is kind of like, okay, let's let it get down 10%, let's let it get down 12%. Let's let some of these areas get totally washed out. It's not a horrible thing. Again, I think some of the biggest drawdowns we've seen since last year and the tariff thing was 5% or something like that. So to me I think this sets up pretty good for a whole host of reasons. But you know, there's. You're going to have to pick stocks in this one. That's the one thing I'll tell you. Because some of the cyclic stuff or the energy stuff, it's not going to be that easy anymore.
- [21:04]
Dan Nathan
I think the one thing that we probably will save it for the next time is the Budget Act. I think that's a tailwind that we don't talk enough about about recently. And maybe that's not totally eclipsing the headwinds that these corporations have or the consumer but it's doing a lot to offset it.
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Melissa Lee
Coming up, we are watching shares of KB Home after its latest report. The numbers from the quarter, how our traders are positioned in the housing trade plus caution over clawed code, how the AI tools are reportedly taking more control of your computer and why he's taking another bite out of the software trade. Don't go anywhere fast when he's back in two.
- [21:44]
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- [22:14]
Dan Nathan
Thy ticket lady Jennifer of Coolidge.
- [22:17]
Jennifer
Well, many thanks good sir. Here is my Discover card.
- [22:22]
Melissa Lee
They accept Discover at Renaissance fairs?
- [22:25]
Jennifer
Yeah, they do. Here. Discover is accepted at the places I love to shop. Get it with the times.
- [22:31]
Melissa Lee
With the times. You're playing the loot.
- [22:35]
Jennifer
Yeah, and it sounds pretty good, right?
- [22:37]
Discover Card Announcer
Discover is accepted at 99% of places that take credit cards nationwide, based on the February 2025 Nielsen report.
- [22:44]
Dr. Guy Winch
Men are strugg with their mental health at some of the highest rates we've ever seen. But most aren't getting the support they need and that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap presented by Cigna Healthcare. This season we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts.
- [23:16]
Melissa Lee
Welcome back to Fast Money Software. Stocks sinking today with the IGV index down more than 4%, closing at its lowest level of the month. The latest move coming lower. The move lower. Coming on news that Anthropic agent Claude can now complete your tasks for you using your computer cloud code. And Claude Cowork can open up email PDFs, navigate Internet browsers, even export photos for you. Wow. Anthropic is currently testing out the feature for Pro and Max subscribers. It actually takes control of your cursor.
- [23:48]
Dan Nathan
Mine finished my Christmas shopping yesterday. It's freaking amazing.
- [23:51]
Total Wireless Announcer
Unbelievable.
- [23:52]
Melissa Lee
Are you serious?
- [23:52]
Mike Schumacher
No.
- [23:54]
Melissa Lee
See the fact that we could believe it.
- [23:56]
Karen Feiderman
I don't know. I'm concerned. I have Claude and.
- [24:00]
Melissa Lee
Concerned about what?
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Guy Adami
Concerned about loading the data on its own.
- [24:04]
Karen Feiderman
Yeah.
- [24:05]
Guy Adami
Okay. You gotta be willing to take a few things steps here.
- [24:10]
Karen Feiderman
But let's say, let's say hypothetically I were to, okay, download portfolio and I want to look at these and these correlations, whatnot and not have it keep that information. I don't know, maybe I can't feel certain that that's pretty certain. I don't know. I believe that it could be.
- [24:28]
Guy Adami
Yeah. Listen, the fact that software, enterprise software sold off because of this today, this is really geared towards consumers. Consumers, right. It's trying to get consumers kind of interested in agentic AI and getting them comfortable with these sorts of processes. And a lot of us are not there won't be there. But the ones that are using it. I'm messing around with this stuff for the last couple of months. It's pretty remarkable. And the things that you can do like that you thought you'd have to hire some nerd like Steve, like coding all day long or something for three weeks. It's pretty, you know, I mean that it's like amazing. So this is really geared toward consumers who are early adopters who are willing to kind of look at this stuff. And ultimately this is the sort of stuff that enterprises are working on.
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Melissa Lee
So there should be a sell off in igv?
- [25:07]
Guy Adami
I don't think so. So, I mean this is what we've been talking about for four months now. Cowork came out in January.
- [25:12]
Melissa Lee
Better and better.
- [25:14]
Guy Adami
I know, but like, but, but think about this. In the enterprise, it really comes down to trust. Karen's just telling us that she doesn't trust it for her own data. If you are in a highly regulated sort of business, you cannot let these things go hog wild in your servers and in your cloud, in this and whatever. It's just not going to happen.
- [25:27]
Melissa Lee
Well then that would argue the case for Copilot and Microsoft, which Ben Wright says Amelia yesterday said was problematic. They have to save Copilot in order to survive.
- [25:35]
Guy Adami
Well, they are. I mean they did that deal with anthropic. So now you can use open air, you can use Anthropic and Anthropic and Cloud is going to save Copilot. That's the thing. Ironically, you know, Microsoft owns 27% open AI and it seems like a dumpster fire over there. Like when you think about how quickly Claude just took the narrative and has been running with it and it wasn't even from OpenAI, Gemini was the thing over the last six to nine months that really caught a lot of steam. So all of a sudden, you know, this company's raising money. This company being OpenAI at 730 billion, 8, 40 or whatever the hell it is after you know, post money. That seems absolutely crazy given what's going on right now.
- [26:13]
Melissa Lee
Shares of KB Home on the move after reporting the latest details and numbers out of that quarter. Next, you're watching Fast Money live from the NASDAQ markets in Times Square. Back right after this.
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Jennifer
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Right? So we shouldn't get the parachute pants.
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Jennifer
These are making a comeback, I think.
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- [28:02]
Melissa Lee
Welcome back to Fast Money. We've got an earnings alert on KB Home. Shares dropping as earnings and revenue both came up short of estimates. Gross margins and deliveries also a bit light. KB giving softer than expected guidance for Q2. The stock is down 5% right now in the after hours session. They specialize in entry level homes and that's where people are feeling the most pain.
- [28:21]
Mike Schumacher
I think we've done a good job. Delivery is down 14% year over year and it's manifesting itself. Listen, they're all different, but they're all going to be very similar. Very quickly. You look at the stocks, they have not performed now since basically the fall. And now the added kicker here, with rates going up, I mean, that potential tailwind everybody been talking about, that's become a headwind. And if the unemployment rate continues to trend higher, you can't, in my opinion, I'll say it again. I don't think you can go anywhere near these homebuilders yet.
- [28:47]
Dan Nathan
And the homebuilders have done the fullest of their capability of lowering or buying back mortgages or lowering them. So I think we're at the end of that story. They really and truly need rates to come down and come down hard and quick, and we haven't seen that yet.
- [29:03]
Karen Feiderman
So also, guidance was a factor here. We talked about this yesterday. If you're a homebuilder or any company really, maybe the exception of energy companies, why not give less than stellar guidance? You don't need to go out on a limb and or even no guidance. I think we might see some with no guidance.
- [29:21]
Melissa Lee
Coming up, AI and cybersecurity, how Palo Alto Networks is handling the rise in artificial intelligence and the latest threats they are defending against. The CEO will join us next when FAST MONEY returns. Welcome back to FAST money. Stocks closing lower today, giving back some of yesterday's gains. The Dow falling 84 points. The S&P down 4.10of a percent. The Nasdaq down 8.10of a percent. WTI crude settling above $92 a barrel, but falling from those levels in the past hour. Shares of micron down another 2% today, now down nearly 15% since reporting better than expected results last Wednesday. Today's move coming as South Korea's SK Hynix says it plans to spend $8 billion on equipment from rival ASML. Crypto stocks sinking with Circle Internet seeing its worst day since going public. Draft text for the Regulatory Clarity act suggesting stablecoin rewards could be restricted. Coinbase, which is the main distribution platform for Circle Stablecoin was down nearly 10%, gets about 20% of revenues from USDC. And we've gotten a response from New Mexico's Attorney General on the matter. Ruling telling CNBC the jury's verdict is a historic victory for every child and family who has paid the price for Meta's choice to put profits over kids safety. Meta executives knew their products harmed children, disregarded warnings from their own employees and lied to the public about what they knew. Today, the jury joined families, educators and child safety experts in saying enough is enough. The substantial damages the jury ordered Meta to pay should send a clear message to big tech executives that no company is beyond the reach of the law. Policymakers and law enforcement officials across the country can help make this verdict a turning point in the fight for children's safety. This is a watershed moment for every parent concerned about what could happen to their kids when they go online. Of course, as we mentioned in the when we brought you the news, Meta is appealing this verdict. Meantime, cybersecurity stock Palo Alto Network is looking to expand its AI offerings, including introducing, I should say, a secure browser for AI agents. CNBC's Deirdre Bosa was at the RSA conference in San Francisco earlier today, is now joined by Palo Alto Network CEO Nikesh Arora.
- [31:30]
Deirdre Bosa
Deirdre Mel, thank you very much, Nikesh. Thanks for being with us.
- [31:34]
Nikesh Arora
Thank you for having me.
- [31:35]
Deirdre Bosa
Let's start with what you're seeing right now amid the Iran war and retaliatory attacks. Are companies prepared or are they still playing catch up?
- [31:43]
Nikesh Arora
Well, in the last few years, whenever we had a geopolitical situation, cyber has now become part of the arsenal. You've seen cyber attacks being used offensively to go sort of nullify situations so the armies could get in to do their stuff. And you're seeing retaliation from nation states as it relates to retaliating to efforts that the US has sort of undertaken on behalf of the part of the world. And we are seeing attacks from Iran. You're seeing them, but they're more opportunistic. They're in terms of they're trying to send a message that we can attack certain entities. So they're not programmatic yet you are seeing examples where they're getting in and disrupting certain businesses. And I think there is a possibility we'll see more of that if this strife continues.
- [32:25]
Deirdre Bosa
Right. That was something similar to what I heard from the databricks. CEO today was also at rsa. They launched Lake Watch. Ali Godsey, the CEO, said that basically the defenders can't keep up. Customers are asking him for a product and he's saying that his tools can do what you can at 80% less lower cost. How do you respond to that?
- [32:47]
Nikesh Arora
Well, first of all, you know, I'm really excited that more people are trying to solve the cybersecurity problem. So I do think there's a bit of hubris around AI that people believe that is the panacea will solve everything that we haven't been able to solve in the past. I think all players in Cybersecurity. If you see at rsa, the entire rage is AI. Everybody's putting agents into AI, everybody's trying to put generative AI into work so that we can solve the problems in training our model. So I think what he's telling you is that the customers are demanding more AI be used to solve this problem because we need to shorten the time to remediate these attacks because the old methods are not going to work. This is something we've been talking about for the last two years. We built a platform two years ago to do exactly what he said needs to be done. We have 11,000 machine learning models which are analyzing data on the fly as it gets into sims and socks. And we've reduced the mean time to remediate down to one minute. The fastest it has is 28 minutes. So feel very comfortable that our strategy is validated with what he's saying and I welcome him to the field.
- [33:46]
Deirdre Bosa
He would probably say that there's a key distinction. In fact, he did say that. He said that the legacy tools are putting AI on top of their cybersecurity tools. He's using a database to build cybersecurity. They are essentially already in the building. They have their customers, your customers data. Isn't that a harder competitor to fight than another cybersecurity firm?
- [34:06]
Nikesh Arora
I mean, I haven't paid attention exactly was talking about in terms of what he's actually built. But remember, since we launched our SIM product, we are now ingesting 17 petabytes a day of very specific security data and applying AI from the ground up to solve the problem. So I think we are doing exactly what he's aspiring to do. We have deployed north of 300 customers. We have 300 more to go. By the time we're done, we'll be in the 2025 petabyte range. So we still retain the largest amount of security data in the world from a database perspective. So I think it's just validating what we're trying to do.
- [34:39]
Deirdre Bosa
Nikesh, you're listed as a partner on their press release. So why did you sign up if you're already doing what they're trying to do? And how many partners have said publicly they want to replace your tools?
- [34:52]
Nikesh Arora
I looked at the press releases. You showed it to me. It's great. It says they ingest data from every security company and that's true, they should have to.
- [34:58]
Deirdre Bosa
So you didn't know that you were going to be included on it?
- [35:00]
Nikesh Arora
I'm sure my team talked to them, but we Talk to anyone who wants to ingest cybersecurity data. Our cybersecurity data for cybersecurity companies is ingested across the board in the industry. So Microsoft ingests our data, we ingest their data. CrowdStrike does. So we do the same. This is an industry where you have to collaborate and make sure because the customer wants the data to be commingled and be able to analyze attacks against that. So I'm sure we're doing that.
- [35:23]
Deirdre Bosa
But I will note CrowdStrike was not part of it, but this is obviously a larger conversation. I know they were talking about it on the show earlier, the threat of AI to sort of any software tools. But Nikesh, thanks for being with us today.
- [35:34]
Nikesh Arora
Thank you for having me.
- [35:35]
Deirdre Bosa
Let's all throw it back over to you in the studio.
- [35:37]
Melissa Lee
All right, Deirdre, thank you so much. Debo. I'm Palo Alto with CEO Nikesh Arora. Okay. So I don't know even here cyber can be displaced, but you need cyber. So how do you.
- [35:50]
Mike Schumacher
You need cyber without question. And Palo Alto is, we've said it 100 times. I think it's the gold standard in the space. Here's the problem. Nobody cared about valuation. Now people are going to valuation trades about 40 times next year's number one. Number two, it's the fifth largest holding in the IGV. So it's getting dragged down by the rest of the components in that that's working against it. And this whole software thing, I mean, they're getting sort of conflated, I guess is a word along with that space. So they're going to be guilty until proven innocent. 145ish on the downside is a pretty significant level.
- [36:22]
Melissa Lee
By the way, there are already threats embedded in AI. I mean, Kaspersky Threat Research has found malware in downloads. Basically, if you want to download Claude and openclaw for some of these downloads, you search it. If you search it, it'll come up. There's a sponsored ad. It looks almost identical to the actual place where you would actually download the real Claude and the real openclaw. And it embeds malware in your computer and then it just lies out there and then it hits when it wants to.
- [36:50]
Dan Nathan
This should be the right environment for all of these stocks. But to guys point, when you look at the crowdstrike that's down 15% year to date, snowflakes down 25%. They've all been hit by this wall in October. And I think it has a lot to do with what Guy's talking about more software and not real fundamentals. Although growth has been decelerating for them.
- [37:14]
Karen Feiderman
Just to your point. That did happen to me. I was doing it with William, my tech savvy son, and he's Mom. No, not that one.
- [37:22]
Melissa Lee
He knew that it was a fake.
- [37:23]
Karen Feiderman
Yes.
- [37:24]
Guy Adami
By the way, that could happen with anything. The fact that it's like AI, it could have been Google or Amazon or something like that.
- [37:30]
Melissa Lee
Well, yeah. All right. Coming up, house struggle. Have a ball, Dan. Download whatever you want. Have at it. Health struggles, it's pharmacy, biotech and the broad health care space all in the red this year. But can things turn around? As we get ready to kick off Q2, we'll get all the headlines from BMO's health conference, the names that could shake up the space. Fast Money back into. Welcome back to fast money. GLB1 drugmakers Eli Lilly and Novo Nordisk are on pace to close out the quarter firmly in the red, down 16 and 27% respectively, as investors weigh rising competition and pricing pressures on the industry. All eyes now on the launch of Lilly's much anticipated obesity pill and the ripples it could have across the weight loss space. That next chapter taking center stage at today's BMO Metabolic Health Summit. The firm's head of health care research, Evan, David Segerman, joins us here on set for more. Evan, welcome.
- [38:26]
Evan David Segerman
Thank you for having me.
- [38:27]
Melissa Lee
What did you learn from Lily in terms of the timing?
- [38:29]
Evan David Segerman
So we didn't learn anything new in terms of timing, but body language is positive. We had the chief medical officer, David Hyman with us and you know, their conversations with the FDA are going well. Obviously they're not going to tell us anything that they can't. They don't want to compromise that. But it's clearly a high profile launch and they are very focused on it. They emphasize how they have I think a billion and a half in inventory ready to go. So when it's approved, they will be launching.
- [38:52]
Melissa Lee
Did you hear anything from Novo that indicates any urgency around the portfolio? Anything?
- [38:59]
Evan David Segerman
Yeah. So I think stock a few things with Novo. 1 the WeGovy Pill launches is gangbusters. It's going really well.
- [39:05]
Melissa Lee
Doesn't matter.
- [39:06]
Evan David Segerman
I know, I know. They need, they need a bit of a strategy kind of 180 and we'll get that at their capital markets day in September. But that's going well. I think folks are kind of in this holding pattern until or for clip runs approved. To see what both of those products do. They just got Hidos or Heidos SEM approved. They really need another asset. I think Category is just disappointed time and time again and absence something beyond sema. It's really hard for investors to really feel comfortable with what Mike's doing now that he's been in the seat for almost six months.
- [39:38]
Karen Feiderman
So on Novo, sure, it doesn't seem like expectations are very high and you say it's going well. Is there a number that would actually move the stock higher?
- [39:48]
Evan David Segerman
Well, a few things to think about. One, I think their estimates for the WeGovy pill in their guidance are pretty low. I think it's 6,700 million. Under a billion for sure. I'm into the billions. So we could see an upward guidance revision either in 1Q or 2Q. You know, they do like to do that a lot that could help the stock. But I really think they need something beyond SEMA and they need a strategy kind of 180. A lot of folks are also nervous about generic SEMA coming on in Canada and in Asian countries.
- [40:19]
Mike Schumacher
Bloom is off the roads a little on structure gpcr, but I don't understand why necessarily. And I think they made comments and correct me if I'm wrong, but they might be sort of in the game to be acquired. So what's the problem here?
- [40:31]
Evan David Segerman
I think they are definitely in the game to be acquired. Ray Stevens, CEO, has talked a lot about partnerships. I think he wants value for their ambulance asset, which we'll get data for later this year with Structure, you know, a lot of slicing and dicing of the data. Some folks think that there's some tolerability issues. I don't see that. But 16% weight loss is very strong and could be a core portfolio product for any big pharma company. That's not.
- [40:53]
Melissa Lee
On the topic of M and A. You also had an emerging companies panel. Yes, and there's one. There's some notes that caught my eye. Orthogonal weight loss methods from Corbis. Can you describe what that is and how far out is this target?
- [41:07]
Evan David Segerman
So they're actually looking at, I think a CB1 inverse agonist. Novo has one. And we know that these drugs work, but there's potential for some neuropsych kind of side effects. We'll get more data from their product later this year. But their idea, like, I think, like, kind of makes you go crazy, I want to say.
- [41:25]
Melissa Lee
Oh really?
- [41:25]
Evan David Segerman
Which would look great. I mean, side effects, serious side effects. But theirs is not brain penetrance, so you shouldn't have that. But we'll get data on that later this year.
- [41:35]
Karen Feiderman
Is that A quarterly?
- [41:37]
Evan David Segerman
No, no, no. Amgen's is quarterly. We had Amgen there too. Everyone was here. Amgen, obviously with Maritide. A lot of focus there. You know, they are really gearing up to be a player in this space, kind of coupling it with their strength in Repathone.
- [41:51]
Melissa Lee
Based on what you learned today and all the players that are out there and the possible targets that are out there, etc. In one year, what. What tie up do you see happening? Or maybe none. Maybe the answer is zero.
- [42:04]
Evan David Segerman
I think once you get the structure, Amblin data, I think there'll be a partnership with them. You know, when it comes to Lillian Novo, I don't, you know, they'll probably do smaller deals. I think Novo is probably primed to do something larger. Not necessarily an obesity, maybe in an adjacency. And you know, it's really going to be what happens with these two pill launches before big pharma wants to jump in again.
- [42:28]
Melissa Lee
But seeing that Novo had a great launch for the Wegovy pill. Does it matter if Eli Lilly has a great launch for Orphor?
- [42:34]
Evan David Segerman
I mean, I mean, so what's interesting. So we're only 60 days into the WeGovy pill launch. What we need to see is do patients actually come back for the second, third and fourth dose? We had Z from Roe talking about that launch right there. One of the telehealth providers of, you know, for the Wegovy pill, really seeing a lot of enthusiasm. But the question is, do folks come back, you know, six months a year in.
- [42:58]
Melissa Lee
Evan, great to have you with us. Thank you for having our findings at the conference.
- [43:01]
Mike Schumacher
Looks great today. I mean, handsome. Look at that light color at a conference.
- [43:05]
Melissa Lee
Very important day for Evan.
- [43:06]
Mike Schumacher
Important guy, does a great job.
- [43:09]
Melissa Lee
But it's interesting, you know, it's the positive side of being more of a consumer product is maybe the TAM is bigger, but it also indicates that it's. They're not as committed necessarily to sticking to the pill, which is the issue here.
- [43:22]
Guy Adami
You know, again, I think some of the behavior doesn't kind of really bear that out. Right. And the pricing is coming down and the ease of use is coming down. And then just think about this, all the things it's going to be prescribed for. You know, I saw this huge, this great doc that was on CNBC last year. It's called Big Shot and it really went through the illustrious Melissa. But, you know, I mean, you're talking about the tan like last when you did that doc, like you couldn't get that full Pay for under like $1,000.
- [43:50]
Melissa Lee
Yeah.
- [43:50]
Guy Adami
Like so think about it right now. So I just think the more you start seeing it prescribed for other things the ease of use, the ease of access, that sort of thing. The pill works but it's just whether
- [43:59]
Melissa Lee
that's a good margin for these companies and in junk.
- [44:03]
Dan Nathan
Yeah.
- [44:03]
Mike Schumacher
Oh the whole junk has been junk junk.
- [44:06]
Guy Adami
Let's be clear your junk.
- [44:08]
Mike Schumacher
Thank you for oh by the way you said the picture's not bad. It's nobody can't get out of its own way. I tell you. Struck Karen's got structure in her thing. She's going to be a winner on that.
- [44:19]
Melissa Lee
Coming up a fashionable call on Wall street. Why analysts are bowled up on Ralph Lauren and where they see the retailer heading after a big run over the past year more fast. And to. Welcome back to fast money a call of the day on Ralph Lauren Citi. Upgrading the retail name from neutral to a buy. Raising its price target from 360 to 400. The firm saying they have increase confidence that the momentum in the brand can continue and that market uncertainty presents an attractive buying opportunity. Stock is up more than 45% in the last 12 months. Interesting timing given what's going on.
- [44:57]
Karen Feiderman
Yes, it's not a bad call. I mean I understand why they like it. Right. You know compound annual growth rate margins are improving. They've done a Spectacular job at 21 ish times times it's not crazy expensive but also for me if I was going to be putting more in the retail space it would probably be with tjx. Even though it is expensive. More expensive.
- [45:21]
Melissa Lee
Significantly more didn't last quarter they had strength in Asia Ralph Lauren the brands found renaissance in Asia which I so I think like Asia could be an
- [45:30]
Karen Feiderman
interesting Although this is not a great environment for Asia.
- [45:33]
Melissa Lee
Exactly right. That's why I think the timing in particular for this upgrade is is half
- [45:38]
Karen Feiderman
a step ahead of me.
- [45:38]
Mike Schumacher
Little late but I have it less than that. I would like 20ish times I think they're going to earn $18 or so next Whatever we're splitting here. It's less than a market multiple and it seems like they have some tailwinds. So it's a late call but I still think you can own the stock
- [45:50]
Dan Nathan
and there's a lack of premium brands and this one seems to be gaining traction. Took a hit in the market and then when you look at Tapestry that's been a storied stock over the years that's another premium brand Chart looks okay there but but I wouldn't disagree that I think with margins, margins are strong and I think it has some serious tailwinds going into the back half of the year.
- [46:11]
Melissa Lee
Up next, final trades. Time for the final trade.
- [46:26]
Dan Nathan
Stephen I'm looking for a quick rebound in Robin Hood. Please use a sell stop just in
- [46:31]
Nikesh Arora
case you get back.
- [46:32]
Karen Feiderman
Karen yes, so Dell has had an extraordinary run, but I think you got to take a little money off the
- [46:37]
Melissa Lee
table with some upside call selling Dan
- [46:40]
Guy Adami
yeah, gold via the GLD looks interesting to me for a bounce. Looks a bit oversold.
- [46:45]
Melissa Lee
GLD not gds right?
- [46:47]
Mike Schumacher
Okay you know my great yesterday on his birthday but he went right back being loud. I'm kidding. It's a joke. Win.
- [46:56]
Melissa Lee
Thanks for watching Fast. See you back tomorrow and overtime. Mad Money starts right now.
- [47:01]
Shopper 1
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 Snoring Gasping during sleep?
- [47:35]
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