← CNBC's "Fast Money"
CNBC's "Fast Money"
Showdown At The Fed… And Another Hit For UnitedHealth As The DoJ Investigates 7/24/25
00:43:37
All eyes on the Fed as President Trump embarks on a rare presidential visit to the central bank amid its contested renovations. And, UnitedHealth drops after it confirms it’s responding to government probes into its Medicare operations. Plus, Chipotle sinks on its earnings miss, while airlines lose altitude. Fast Money Disclaimer
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- [00:00]
Melissa Lee
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes and everything in between. With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence.
- [00:22]
Tim Seymour
Because with all you've done to find.
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Melissa Lee
Your rich, we'll do all we can to help you keep enjoying it. Edward Jones, Member, SIPC on WhatsApp, no one can see or hear your personal messages. Whether it's a voice call message or sending a password to WhatsApp, it's all just this. So whether you're sharing the streaming password in the family chat or trading those late night voice messages that could basically become a podcast, your personal messages stay between you, your friends and your family. No one else, not even us. WhatsApp message privately live in the NASDAQ marketsite in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight. President Trump making a rare visit to the Fed this afternoon. The latest in the escalating feud between the two. The president sets her policy and the impact it could have on rates and time to buy. Health care stocks have been struggling this year, but one top analyst says the worst may be behind them. He'll lay out his top picks in the space later this hour. Plus, airline stocks get grounded after the latest slate of earnings. Industrial sides losses for Honeywell after its results. And a burrito buzz kill on Chipotle as those shares see their worst day in nearly eight years. The trades on all those moves coming up. I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Mike Co, Dan Nathan and Guy Adami. But we start off with President Trump turning up the heat on Fed chair Jerome Powell. Just in the last hour, Trump became the first sitting president to visit the central bank since 2006. The visit comes as Trump has spent months berating Powell for not cutting rates. And amid more recent criticism over the cost of renovations of two central bank buildings. Eamon Javers is at the White House with the very latest. Amen, Melissa.
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Eamon Javers
It was dramatic. It was a power play. It was unprecedented. And it was awkward at time, this meeting between President Trump and Jay Powell at the Fed. Remember, the president's been harshly critical of Powell for not lowering interest rates. Also harshly critical of Powell over the cost overruns of this new Fed construction. He went there to the Fed to see the construction in action. The Fed chair was his tour Guide, at least for a time. And they approached the media and on camera had a bit of a spat about exactly how much this renovation costs, which costs should be included in the total number, which cost shouldn't. Take a listen to that moment.
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Melissa Lee
2.7 is now 3.1.
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Guy Adami
I'm not aware of that.
- [02:54]
Melissa Lee
Yeah, it just came out. Yeah, I haven't heard that from anybody. The Fed.
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Eamon Javers
So you see the President there taking out a piece of paper listing the details. Powell looks at the piece of paper, says, well, actually you're including the Martin Building, which is the third building on that complex which has been previously renovated. Powell says, not fair to include that in the total. Trump says, well, it's part of the overall building process here. You know, the two men really disagreeing strongly on camera. But then there was this moment as well. The President then moves through a tour, gets to the end of the process, talks to reporters in sort of an impromptu scrum, and he's asked by a reporter whether or not cost overruns at the Fed building are a for cause reason to fire Powell. And listen to how he answers that question, because I think the nuance here is important.
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Melissa Lee
Is this project a fireable offense for Jerome Powell?
- [03:47]
Guy Adami
Look.
- [03:49]
Melissa Lee
I would love to see it completed. I don't want to put that in this category. It's a very complex thing that could have been made simple.
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Eamon Javers
So, Melissa, as provocative and dramatic and unprecedented as this visit was to the Fed by the President of the United States, it's certainly a power play. But there you hear the President backing off this idea that he's going to want to fire Jay Powell. The President said he doesn't want to fire him. He has said in the past he's just going to wait until Powell's term is over. He says he's got a couple of other candidates in mind. So the president pushing the pedal, but not all the way to the metal here. He backed off of the harsh personal insults that he's used over social media against Jay Powell. Didn't use any of that in person. Said he wanted to be polite, didn't want to get personal, and then didn't call for Powell to resign. Didn't say he wants to fire Powell. So the president not going all the way here, I think, and that's the nuance I think markets are going to be looking for.
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Melissa Lee
Melissa, in the end, I think it was interesting too, even that the president, you know, he referenced Europe in cutting rates. I think he said 11 times. And the Fed hasn't cut once, which we know is not true. But in the case still to cut rates, he's still putting the pressure on, even though he's not, you know, dangling, you know, firing him anymore.
- [05:08]
Eamon Javers
Yeah, he's absolutely putting the pressure on. Absolutely. Demanding a rate cut and, you know, embarrassing Jay Powell.
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Melissa Lee
Right.
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Eamon Javers
I mean, he's accusing Powell of mismanaging this multibillion dollar project and forcing him to go on a tour of it on live national television. I mean, that is an embarrassment. He's hanging that embarrassment over Powell's head at the same time demanding those rate cuts. So this is not nothing. This is definitely extreme political pressure. But at the same time, he's backing off some of the harshest rhetoric. So it's an interesting sort of push pull that's going on here. I think markets are going to come away from this saying, well, you know, he's not calling for Powell to resign. He's not firing power. We're reassured.
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Melissa Lee
Yep. Eamon, thank you. Eamon Javers at the White House. I think that is exactly the headline that we walk away with out of this press conference.
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Mike Co
That's the takeaway. And we're here for markets, not political stuff. And I think that's right. And, you know, there'll be days when the rhetoric gets ratcheted up in terms of. But I think, I don't think necessarily that something is imminent. I thought that a couple weeks ago, I thought he was at a point of anger where he was going to push a button over the weekend. Doesn't look like it's going to happen. With all that said, I mean, slow and steady wins the race. Said, if it ain't broke, don't fix it. Things are fine. And that whole argument that the rest of the world is lowering rates. My grandmother used to say to me, melissa, little guy, if everybody was jumping off you, little guy, that would be me. Would you do it as well? And the answer, of course, is no. It has nothing to do with what the rest of the world is doing, which I find the fact that people don't acknowledge that to me is sort of interesting.
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Dan Nathan
We also have the most resilient economy in the world. You know, we have, like, unemployment near record lows. Right. We have GDP that's tracking right around, you know, pre pandemic levels here. And if you think about what's going on in the markets, I mean, stock market doesn't care. The bond market doesn't really care. The volatility index is literally at 15. I mean, this is a level that we haven't seen in a very long time. So, I mean, I suspect that we're going to get through this meeting. The, they're basically going to be, you know, status quo. This is what everyone expects. If you look at the CME Fed funds tracker, it's only implying about a 40% chance that we're still 25 basis points, you know, in September. I mean, right, right now, I mean, like, everything's fine, right? The stock market doesn't care. And if you just look around and they're going to hit a bunch of these stocks. There's a huge disconnect between the indices though, and what we're seeing about companies, what they're saying, what they're reporting and the reaction to them right now. And I think something's going to actually have to give there. I think the monetary policy thing is probably going to take a backseat in the not so dis distant future.
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Melissa Lee
And it's not just the stock. I mean, the bond market has been pretty complacent about all of these developments. You can make a case for rates to go higher, significantly higher. Uncertainty about the Fed and whether or not Trump is going to fire the Fed. Uncertainty about having to issue all sorts of debt to pay for a deficit. I mean, none of this has really upset the bond market too much, Mike.
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Guy Adami
Well, I mean, just take a look at what twos and tens did today. You know, we saw that two year rates actually ticked up just a little bit more than the tens did. You know, it's interesting because for all of the complaining that the President is doing about rates, you know, what, what is it that the White House would really like to see as far as rates are concerned? And what they'd obviously like to see is that their funding costs go down. Right? So they, they're envious that, that the Biden administration was funding massive amounts of debt at, you know, an adjusted weighted average coupon that was, you know, less than 2%. And we're not going to go there, right? So we're not, we're not going to get 10 years back below 2%. We're not, we're. The zero interest rate policy, that's, that's dead and gone. And you know, there's not something all that attractive about funding everything at the short end of the curve either, which is essentially what they're trying to do. But how much are they saving? 50 basis points on 15.5 trillion of refi, which is essentially what we have to look at this year, next year and the year after. That's only going to save you, what, about $75 billion in interest rate expense. So, you know, I think Trump is happier having something to complain about and someone to point the finger at than really putting somebody else in that spot. What's it going to do, honestly?
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Melissa Lee
Well, that's a fair point. But at the same time, you know, his argument and those who advocate for lower rates, their argument is, you know, borrowing costs for everyday Americans will go lower as well. Tim, it does seem like the Trump.
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Guy Adami
Administration are in the tens though. That's what's going to matter for housing costs and things like that. It's off the 10 end. You can't force that lower by lowering.
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Melissa Lee
The federal rates and the Fed can cut rates and we've seen what the, you know, what the 10 year yield has done in the face of a 50 basis point cut gone the opposite direction. But there is an argument to be made that the Trump administration does seem to want to desperately help the housing market. And for that, Tim, that that seems to be directionally important as an investor who's potentially looking at housing plays except.
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Steve Liesman
For the fact that I think the long end of the curve is not going to necessarily be impacted by what the Fed does on the short end of the curve. And we've seen this and I mean, you know, 420 to 450 is where we've been on this move in the 10 year over the last three to six months. I mean it's really done almost nothing. I just think that it's a lot of political bluster. I think Scott Besant when he, Treasury Secretary Besant when he was hedge fund or hedge fund manager Besant was someone that wanted a lot less Fed in I think in our lives. And I think there are a lot of people out there, including the Biden vigilantes, that that feel actually that central banks have had too large a. So on some level I think Scott Bessen's been pretty consistent. I think on some level the idea that the Fed shouldn't be overly involved in markets I think is something that is a fascinating conversation to have. I think it's absurd to talk about global interest rates and say the US should be going lower because interest rates around the world are lower and compare us to other interest rate regimes. And that's been done on our show. It's been done out there, maybe even in Washington. I think the most important thing for markets right now is that the volatility in the bond market has been lower outside of. I know it's a big caveat, but that that V shaped move or the move down On Liberation Day, if you remove that, we're in an uptrend on markets that goes all the way back to November 22nd that has had some band of volatility in it, but basically has been unabated. And we're now almost 37% off those closing lows on the NASDAQ from April 8th. So markets aren't paying attention to any of this.
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Melissa Lee
For more on what this all means for the Fed, let's bring in CNBC senior economics reporter Steve Leeson. Steve, great to have you with us. You got a smile on your face. What you take, I mean the big headline is that he's not going to fire Powell.
- [11:33]
Michael Kantopoulos
I think that's an important headline. But I think you're really into a fascinating conversation which is how dovish does the market expect the next Fed chair to be? If you take a Look at the 2 year, it's trading at around 3 9,391 today, ticked up a little bit. And that's been a pretty consistent range. It kind of tells you that the market and the same is true when you look at Fed probabilities. The market does not expect Trump's next choice for Fed chair to come in with his rate cut guns blazing. I'm looking out the curve, guys. Okay, so if you look at September, 67%, 68% and then go ahead and look at the second cut comes in in December, 65%, that's the next one. But then you look down the road, you don't get a third cut until April. And that's where Powell is still there. So you don't really see too much in the way of the market thinking that the Fed is going there. Plus, another thing, I want to underscore what Mike was saying, Melissa. The Fed legally cannot lower interest rates because of debt service costs. It has a mandate to do it for employment or inflation. There is no mandate. It would not be legal for them to lower it because of debt service costs. And you don't really want it to happen for that reason because think about it. Let's say you took out a mortgage and that the bank said to you, yeah, take this mortgage out, but we're going to try to raise your interest rate every chance we can. That's kind of what they're talking about, right?
- [13:06]
Melissa Lee
Well, I mean, Kevin Warsh when he was on Squawk Box, talked about the Fed Treasury Accord from 1955. Right. I mean, under that sort of scenario, let's say the Fed next Fed chair is of that mindset, there could be some more cooperation in terms of what you do with rates and what you do with managing the balance sheet to perhaps manage rates.
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Michael Kantopoulos
So the 51 accord was one that gave the Fed independence, Melissa, to pursue its mandates from Congress and not have to be concerned about the debt service, which it did prior to that during World War II and the aftermath of that. So that was the treasury accord back then. If you did it again, you could imagine some coordination between the Fed and the treasury about the balance sheet, if the Fed was going to wind it down, that kind of thing. But in terms of making policy based upon debt service costs, I think there'd be a bit of a rebellion in the bond market because of that. And you sort of. Melissa spoke about that earlier about how the bond market went the other way the last time the Fed cut. It's very important, Melissa, when the Fed cuts, that it has the market with it and not work against it, because the Fed works through the market. So you can't really piss off your agents in the process of trying to lower interest rates.
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Mike Co
I know you know this adage, Steve, that every new Fed chair is challenged by the bond market. And I can make an argument that the most bullish thing for the bond market, or in other words, the best way to keep rates where they are, is to leave Jerome Powell in the seat to make a change. Now, that next person will absolutely be challenged. Thoughts on that?
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Michael Kantopoulos
I think that's a great point, and you're absolutely right. Historically it is true. It was a few months for Greenspan. Bernanke ended up being challenged. Everybody ends up being challenged in some way. Powell had his whatever you call, I can't remember what you call it, but when, when there was a meltdown in the bond market over the winding down of the balance sheet. So that's a great and important piece of information. And how the market would challenge the next Fed is unclear. But I think what you're getting at is important, which is, look, the process is not perfect and Donald Trump could be 100% right. God did not say to Moses that interest rates need to be 4.3%. It's a judgment call, but it's a judgment call made through a process of committee members from around the country, board of governors appointed by the President, that comes up with this answer. Could there be reform in the process? Absolutely. Should it be reformed? Almost certainly. But the market needs to have trust in the process. And that process does not include lowering interest rates or cutting the knees off of your agents. And in order to reduce the debt service Costs, especially as you guys point out, not entirely clear the market goes with the Fed on that.
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Melissa Lee
Steve, always a pleasure. Thank you. Steve Liesman.
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Michael Kantopoulos
Pleasure.
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Melissa Lee
For more on how this could play out for rates, let's bring in Michael Kantopoulos. He's a deputy Chief Investment Officer at Richard Bernstein Advisors. Michael, always good to see you as well. What do you make of the bond market remaining very calm, low volatility amidst all of this?
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Jared Holz
Yeah, I think it's telling us that a lot of this stuff from the White House is really just noise at the day. What matters are our fundamentals more than anything else. And I think the fundamentals right now are pretty unclear. And when you have unclear fundamentals, you stay somewhat rangebound until you have clarity, until you have a direction. And right now there's really no direction. Do we have higher inflation? Do we have lower growth? What? You know, what's the story, Michael?
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Dan Nathan
You know, last year right around this time, there were debates about what the Fed should do again, Right. And so we got that 50 basis point cut in September. Then we had, you know, two more. What do you think it did for the economy? Like, here we are on the other side of that. There was a lot of trepidation. I know that they were worried about the employment picture and that sort of thing. I mean, what did it actually do? We hear that phrase long and variable lag. So I just Wonder what another 50 basis points would do sooner than the market expects.
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Jared Holz
You know, I'm not entirely sure it's done a whole lot yet. I mean, 50 basis points really isn't that much of a move. If you got another 5,100, I think it would start to accumulate over time. But 50 basis points I don't think had a huge, huge impact on the broad economy. What was interesting is that the Fed cut rates at a time of accelerating earnings growth that had never happened before. Just like in 2022, the Fed raised interest rates into a profit deceleration that had never happened before. And what I do think it did is I think it helped to sort of give confidence back into the earnings cycle and the early earnings rally. I think that caused earnings to accelerate a little bit longer.
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Mike Co
Early in the show, I said that it doesn't. Just because the rest of the world is doing it doesn't mean we should do it. I absolutely believe that. But I also believe that global bond markets are interconnected. I'll bring up the chat. I think 30 year bonds were introduced in 2007 in Japan. They're basically at all time highs in terms of yield, JGBs, I think are the highest since 08. Some bond market is moving in Japan. How important is that to watch what's going on over there for our bond market here?
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Jared Holz
I think it's very important. I think yesterday we saw some moves in the US market and that was largely on the back of what was going on internationally. So it is important. You can't really have, you know, the, the global economy or global rate markets doing one thing in the US really buck the trend unless you get real serious divergences in either growth or monetary policy. And right now that's not really the case. I mean, global growth is pretty much in sync. Generally speaking speaking, central bank policy is. Is largely in sync globally. And I mean, maybe that's a little bit off, but. But yeah, I think it's really, really important, for sure.
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Melissa Lee
You mentioned so many things are up in the air in terms of the economy and inflation and the impact of tariffs. At what point do you feel more confident about the result of our trade policy and what's going on with tariffs in the economy? Is it two more readings? Yeah, more. One more.
- [18:53]
Jared Holz
I think. I think we need to see at least probably two more readings. You know, we know that you had a huge frontloading of inventory build up in Q1. You're working through that now. You're starting to see earnings get hit, right? You saw this week GM earnings get hit. You've seen margins start to compress. Now. I think we're probably starting to see some of this come through in the economy, but I think it's very early days. We probably won't really know the full impact of tariffs on inflation until later this year. So I would say at least two more prints before you've got any sort of confidence in the direction of where we're going and the ultimate landing place. I don't think we'll know for a little bit longer than that.
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Melissa Lee
All right, Michael, good to see you. Thank you, Michael. Topless rba. Tim, what do you think?
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Steve Liesman
Well, I think we've got a dynamic where, as we've all talked about, we. We care about the long end of the curve on some level, more than the short end of the curve. I do think it's also fascinating to think about where credit markets are and we are as tight as they get, at least as tight as they've been in a world where there's all this uncertainty. So those are the things that I think investors need to spend a lot more time at least watching as barometers. We're in the middle of an earnings season. I know there's a debate whether, you know, a small miss has been a big move lower. But I think the companies that have missed to the downside are ones either that were really expensive going into these numbers and were priced for growth or those companies that actually just have something structurally wrong with them. So I'm not saying it's hey, off to the races here, but I'm saying right now the economy, the hard data is telling us that the market, that the equity market that's responding to credit markets and the bond market should not be phased by something they're seeing there.
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Melissa Lee
Meantime, speaking of earnings, Alphabet losing ground post earnings, the big tech stock rising as much as 4% early in the session, but closing well off its best levels. Alphabet said last night that it expects more air related spending. Raised its capex forecast for the year by $10 billion due to cloud demand. Mike, at the time, you know, we had Gene Munster on, it was a sigh of relief, etc. For Alphabet. What do you make of the move today?
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Guy Adami
Yeah, I mean I think that there is obviously some money flow issues that are going on in Alphabet at the moment. I think that the narrative that people have that you know, the core of their business, which is obviously search, it's more than 70% of their revenues, is being impacted by the fact that there's a lot of migration for people who are looking for immediate information or going to large language models. And I think that that basically means that positioning is such that people are sort of reducing their exposure here. I still think that on a valuation basis I'm positive on it for that reason and I think that they are going to figure out a way to sort this out on the search basis. They are definitely trying to use Gemini in that. Anybody who's used Google search is probably recognizing that. And I polled people at a conference a week ago and saw that, you know, it seemed like more people were sticking with this at least as a backup for now. And so on that basis I'm positive. And finally YouTube and Waymo are still, I think, you know, really significant drivers potentially for this. So I'm not too concerned about it, but I think there is still some concern from people who have big positions on it. With the model search.
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Dan Nathan
When we were discussing in the aftermarket though last night, I mean, you know, it's up 3% or something like that. There was just nothing there that I thought was like meaningful that we're going to have the sort of gap that we saw. Microsoft just a few months ago, that sort of thing. And really the issue is how are they going to monetize this spend right now, because they are in a very unique situation relative to many of their other peers, is that they are the ones that have that 70% of the search traffic. They are the ones that have 75% of the browser, which obviously gets a lot of that surf traffic. And so how are they going to monetize this as they cannibalize themselves, they get away from the blue links, they get paid everybody every time someone presses a blue link based on a search, that sort of thing. So it's great that they're doing the overlays. It's great that they have this technology. They can kind of spread it across all of these different services that they have. But make no mistake about it, OpenAI is getting three times the amount of daily active visitors that Google has and they're going to have to have a much better product to deploy across all their products and services to really I think hold off the assault on their search revenue.
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Melissa Lee
Coming up, a couple of big stock moves catching our eyes today. Dow and Honeywell sinking, why investors were unplugging from Tesla and what Sydney Sweeney has to do with American Eagles. Jump the first shares of intel on the move after its report. The numbers and the details from the quarter next do not go anywhere. Fast money's back in tune at Capella University. Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.
- [23:46]
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Melissa Lee
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Melissa Lee
Building your personal brand. Register now@cnbcmakeit.com Personal Brand welcome back to Fast Money. We've got an earnings alert on Intel. The semi company beat revenue estimates issued better than expected forecast Shares well off after hours. Highs even went negative briefly. It's now up just under a percent. Here. CNBC's Christina Parts Nevelis has got the numbers. Hi, Christina.
- [24:48]
Jared Holz
Hi, Melissa.
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Melissa Lee
Well, Intel's Q2 revenue beat you talked about was against already low expectations, but the message is clear on the call right now. Intel will continue to be disciplined around cost cutting. Intel expects to end the year at 75,000 employees, down from 96,000 at the end of the second quarter. So there's still more to go. The report was Intel's second since Lipp Bhutan took over as CEO just in March, promising to make the chip makers products more competitive again and to cut layers of management, including slashing staff in Oregon and California. As part of those cost cutting measures they announced on the call, they are canceling planned projects in Germany and Poland as well as consolidating a plant in Costa Rica and they will slow the pace of construction in Ohio. Just in the last hour I spoke with CFO Dave Zisner who said they will allow that will allow more Capex to be directed here in the United States. Zisner did admit they did see some tariff pull in quote, to the magnitude we saw last quarter. But he added he wasn't sure it drove their revenue beat. So CEO Lipputan did say in an.
- [25:47]
Jared Holz
Internal memo on Intel's website that the.
- [25:49]
Melissa Lee
Company'S upcoming advanced chip manufacturing process, which is called 14A, will be based or built out based on confirmed customer commitments. In other words, quote, there are no more blank checks. According to the CFO though, 14A is already showing better yields and is in a quote, much better position to achieve customer success. Melissa Christina, thank you. Christina Parts Nevelis Interesting that, you know, there was low bars. Christine I had pointed out the Stock is up 17% year to date compared to the more meager gains in the SMH overall. Guy, I'm trying to get through it.
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Mike Co
So they're blame people off. They're going to get to core. I think 75,000 employees. The market will interpret that as good thing. The revenue guide for the third quarter I thought was very good. That should be a positive. The margins were really bad. But I don't know if that's a function of this restructuring charge that they're taking. So if you back that out, I don't think it's awful. I think that's why the market is trying to struggle with. It should be higher or lower. I think it should be higher.
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Melissa Lee
Tim.
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Steve Liesman
I just wonder what this company is. What are they trying to if All I'm hearing about is operational efficiency and cutting Capex and a weaker gross margin. Yeah, we beat a lower bar, 350 basis points. I'm just not sure, I'm just not sure what they want to be when they become the company that they should have been five years ago. And we still have to determine where they are going to be on GPU and where they are in foundry and and ultimately remember they had all kinds of Capex or at least money to spend and had joint ventures with a number of big either hedge funds or countries and incentives and we still don't really know what this company wants to do. I want to hear a strategy. I don't want to hear about cost cutting.
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Melissa Lee
Coming up, some of the hardest hit names in today's session, the results that had Dow and Honeywell deep in the red and UnitedHealth's latest malady as the DOJ digs in the details ahead. You're watching Fast MONEY live from the NASDAQ markets at in Times Square back right after this. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella. Edu CNBC Make It Online Course how to Build a Standout Personal Brand Three industry experts will show you how to create and grow your brand step by step. There's no time like now to start building your personal brand. Register now at CNBC. Make it.com/Personal Brand welcome back to Fast Money. We are watching a couple of stocks making big moves after earnings this morning. Let's start off with Dow shares dropping more than 17%. That's the worst day in five years after the company reported a wider than expected Q2 to loss. Revenue coming in well below estimates as well. Dow also slashing its dividend in half as it looks to preserve cash. Go to you on that, Mike?
- [28:49]
Guy Adami
Well, that's never a good thing, right? If you're trying to preserve cash. I have a fairly simple barometer that I like to use when I'm looking at companies and that is how is their revenue growth compared to GDP growth and compared to the growth in revenues for the S and P generally? Are their margins expanding? How does free cash flow look and how is their earnings growth relative to the S and P? And if those things stack up favorably, then they get the nod on the long side. But that's not the case here on any one of those metrics Right. So we've got the top line remains flat to negative. We have basically no net income margins which basically indicates some kind of distress. And it's trading at a multiple that's actually a premium on a forward basis to the S and P. Why would you ever buy this stock rather than something like Spot? You wouldn't. So despite the fact that it's been hit, I don't think you can dip and dip your toe into this one yet.
- [29:42]
Melissa Lee
All right, let's get to Honeywell now. Shares slipping also despite a beat on the top and the bottom lines. The company also raising its outlook for the year. Revenues in its automation business decline year over year. Honeywell preparing to split into three businesses, Automation, Aerospace and Advanced materials. Guy, what do you make of this decline?
- [29:58]
Mike Co
Well, it makes sense. I mean, the valuation is always stretched a little bit. They're deserved of it. But if you look where we just traded up to, we've got up to the 2021 high ish and seemingly are stalling out. So that makes sense. I think Honeywell is one of the great industrial companies. We don't talk about it much, but this move to me makes sense. I think there's further downside here.
- [30:17]
Dan Nathan
It's funny. So we're just talking about two companies that are kind of important in the whole industrial sort of pastiche, if you will. And if you think about who Dow, who they sell into, I mean, you think about, you know, Lockheed the other day, we have Honeywell today. I mean, there's just a lot of stuff under the hood. Michael mentioned GM that is not trading particularly well. And you could say maybe it's about growth, maybe it's about tariffs, maybe it's a host of other things Tim just mentioned like mis execution and some of these things. There just seems to be a lot of stocks where investors are hitting the sell button first and asking questions later, at least in the last week and a half.
- [30:50]
Melissa Lee
Coming up, another hit for UnitedHealth. The DOJ digging into the company's billing practices, details on the latest black eye for the company and whether shares can battle back after its decline over the past year. More on that when Fast Money returns. Welcome back to FAST money. Stocks mix as earnings season rolls on. The Dow dragged down by losses in IBM, Honeywell and UnitedHealth, while the S&P 500 Nasdaq both set fresh records at the close. Again, apparel retailer American Eagle may be the latest company to achieve meme stock status. Shares popping after the company announced actress Sydney Sweeney will headline its fall campaign. American Eagle Stock rose as much as 12% today, but has been nearly cut in half over the past year. Shares of Tesla sinking after its earnings report last night. The company reporting a second straight quarter of declining sales. CEO Elon Musk also warning Tesla may face a few rough quarters as federal EV tax credits expire. Shares of Accelerant holdings now surging in the market debut up more than 26%. The insurance marketplace operator priced at $21 a share last night and some after hours action. Boston Beer topping EPS estimates disappointing on revenues and deckers higher after beating bottom line estimates and seeing better than expected HOKA and UGG sales. The company also upping current quarter guidance and Newmont Mining higher as it got a boost in profit from higher gold prices. What was that about?
- [32:14]
Mike Co
Well, no, I'm just saying things.
- [32:15]
Guy Adami
Remember that song?
- [32:16]
Melissa Lee
What does that make you go?
- [32:17]
Mike Co
Yeah, what was that? Dan knows this. Was that that Hammer person?
- [32:20]
Dan Nathan
I'm not into the hip hop. You know that.
- [32:22]
Melissa Lee
It was cnc Music Factory. I hate to talk about that.
- [32:24]
Mike Co
Oh, no, stop it. Somebody's in your. That's ridiculous.
- [32:27]
Melissa Lee
No, no, nobody was in my ear. I happen to know that it's my ringtone. That's just kidding. Sure. All right, let's move on. UnitedHealth falling almost 5% after the insurance giant said it is complying with Justice Department investigations into its Medicare billing practices. It follows several reports in recent months that federal prosecutors had opened civil and criminal probes into the company, which UnitedHealth had denied at the time. Shares now down 55% from the all time high, hit back in November. For more on what's ahead, Mizuho Healthcare strategist Jared Holz joins us here on set. Jared, always good to see you.
- [33:01]
Tim Seymour
You too. Thanks.
- [33:02]
Melissa Lee
It's feasible that the company did not know at the time of those media reports. Correct. And as I understand it, the company proactively reached out to the DOJ to figure out whether or not there were any probes.
- [33:15]
Tim Seymour
That's what it sounds like. I mean, none of us work for the company. We don't exactly know what happened, you know, since the Wall Street Journal article came out. But you know, we basically have to go on what the company is saying, which is to say at the time they didn't know. Now that communication has been made official to them in some capacity and they're working through it. So today was kind of like new news, but not new news. I mean, I think most investors thought something was probably happening behind the scenes.
- [33:40]
Melissa Lee
What is the bull case for UnitedHealth? Is there a bull case here.
- [33:44]
Tim Seymour
I think just time is the bull case. Is that time time.
- [33:47]
Melissa Lee
And it's an indefinite amount of time.
- [33:50]
Tim Seymour
Right.
- [33:50]
Melissa Lee
That's not a very good case.
- [33:51]
Tim Seymour
I think you just have to have a long term oriented investment philosophy. And if you want to own the stock today, you're not making a bet that things change tomorrow, next quarter, even 2026 may not be a great year, but that most of the bad news is happening now and they will work through it and this will be a better earnings story, you know, through the, you know, end of the decade.
- [34:16]
Mike Co
Pre Covid, at one point this stock was trading at 13 times, which was historically low for UNH. And then it got to the multiple that made sense. Now the world's changed. 11 times ish. They report on the 29th of July. Given what you just said about long term, does that even matter at this point?
- [34:35]
Tim Seymour
Well, I don't, I don't know if 11 times is the right number because I think the street number now is clearly going to come down. All the messaging from the company and from the sell side, these analysts that cover the stock is that the number is going to be probably south of $20 for this year, maybe a little bit north of 20 for next year. So if it's 18 to 20, which I think is where most people are shaking out, let's assume that's ballpark. Correct. And next year in the low 20s, you're still looking at a 15, 16, 17 time story, which for this company or this stock at this point in time, I don't think screen's cheap to investors.
- [35:10]
Melissa Lee
For this group specifically, what is the biggest question mark? Is it medical loss ratios and whether or not they get much worse? I mean, I'm just trying to figure out like obviously this group keeps trading down on the same news.
- [35:22]
Tim Seymour
Right? I think the question is what is continuing to be the driving factor behind higher utilization? Because it doesn't seem to be what we've all kind of assumed it to be, which is to say orthopedic procedures or cardiovascular. Maybe it's cancer treatments. Because we always, you know, talk about how many, you know, advancements there have been there and patients are taking chemo and IO plus other therapies. Maybe it's, you know, pharmaceuticals that are doing it. We don't really know. We don't know what populations are kind of susceptible at any given time. First it was commercial, now it's Medicare and Medicaid. I think there are a lot of variables to kind of figure out here.
- [36:02]
Melissa Lee
So separate from this. But Sort of related is that you had put out a note, has health care hit bottom? And you said that a lot of investors were asking that question now, not necessarily of this subsector of the space, but health care like pharmaceuticals, etc.
- [36:13]
Tim Seymour
Right.
- [36:13]
Melissa Lee
And your answer is what to them? Yes or no?
- [36:16]
Tim Seymour
I don't think so. I think that certain pockets are. I think we've seen some massive moves in tools and CRO's. I mean Med pace this week up 50% at one point. Icon had a really good day. Thermo Fisher has had a good day. But these are stocks that are coming off of multi year lows and are basically telling investors that they think think that the first quarter was likely the worst quarter of the year and things are getting subsequently better and maybe kind of in line with last year, but not demonstratively better. We can say these things are off to the races. But again, you know, the market cap in this sector is managed care, which we're talking about now, and large cap pharma. You need those two sectors to outperform in order for health care to really get momentum.
- [36:55]
Melissa Lee
All right, Jared, good to see you. Thank you, you too. Mizuho. Michael, what do you think? I don't know. Have you seen action in unh.
- [37:03]
Guy Adami
I mean there's been a ton of Options activity in UnitedHealth. I mean they've had so many breaking stories. You know, one of the things that I think is interesting is that the options premiums have really gone up quite a lot. So I think an interesting play here is, is probably to get into a partial position on the stock and then sell some strangles against it. Take advantage of the fact that the implied volatility is north of 40. You know, the other thing you could do is you could also just go back and say, all right, well let's just assume that a reasonable multiple on the company is, we'll call it, you know, 22 to 25 times. If they could get back to a reasonable rate of growth, what would that mean in terms of eps? And it's a number a heck of a lot lower. So you know, Jared, I hear what he's saying. People's estimates are going to come in and they should, but they have to come in a lot at this point. You know, you could say how about 10, 11 bucks a share on this thing and then throw a reasonable turn on it. And I think that's a very doable number for them. So as long as they don't get into too much legal trouble on the fraud side, I actually think this one's a buy here.
- [38:05]
Melissa Lee
Coming up, trouble on the tarmac. Airline stocks losing altitude in the latest batch of earnings. But the CEOs of America in Southwest and Alaska had to say about recent results, demand and a change to a long standing policy. That's when he's back into the welcome back to fast money. Airlines stocks have been flying high over the last few months. But With Southwest missing Q2 estimates, American pulling guidance and Alaska Air giving a weak forecast. Are the airlines about to get grounded? Phil LaBeau's got more on this. Hey, Phil.
- [38:38]
Guy Adami
Hey, Melissa. Rough day for the airlines. Let's start with Southwest. The issue here, it's about the guidance. It was lackluster compared to what analysts were expecting and compared to what their previous guidance was. Here's CEO Bob Jordan talking with us about what's happened and why he believes there might be a glimmer of hope in the third and fourth quarter.
- [38:59]
Dan Nathan
If you look at the full year.
- [39:00]
Melissa Lee
We set out a guide of 1.7 billion in EBIT.
- [39:04]
Eamon Javers
And the difference is just the macro.
- [39:07]
Guy Adami
That billion, a lot of macro though it is.
- [39:09]
Melissa Lee
But it's the same 5% that you've seen really every other domestic carrier report.
- [39:13]
Dan Nathan
They'Ve seen a 5% drop in demand.
- [39:15]
Melissa Lee
And it's and that's that again. The good thing is that we've seen it inflect back.
- [39:21]
Guy Adami
All right, let's look at the guidance from American Airlines. The issue here, look how wide it is. Everything from a loss for the full year of $0.20 to a gain of $0.80. Big range there. When we talked with Robert Isom, he believes the key is whether or not the consumer actually comes back as they believe it will.
- [39:41]
Melissa Lee
I really think it is about the.
- [39:42]
Dan Nathan
Uncertainty for the consumer.
- [39:45]
Melissa Lee
Now as we move from June into July, we've seen a sharp uptick and that bodes well for us from a domestic perspective. And as we move out again into the third and fourth quarter, we see supply and demand trends moving in our favor. That bodes well for the future, especially with all the things that we've set up to do.
- [40:06]
Guy Adami
And as you look at Alaska Airlines, we talked to Ben Minicoochee today. Yes, their guidance is to earn at least 325 this year. But again, Melissa, this is all about the confidence of whether or not people investors have confidence in the broader consumer on the lower end, especially booking flights and traveling more in the second half of this year. Right now the market has decided these three reports that's they're not optimistic. It's going to happen soon. It may happen, but they need to see more.
- [40:36]
Melissa Lee
Right, Phil? Thank you. Phil LeBeau. I'm going to take a page out of Dan's book and be silver lining, Melissa, because what I heard from the American Airlines CEO in Southwest Airlines CEO Tim is that they were seeing while demand dropped off, it inflected higher. They are seeing that recovery there. But that wasn't the emphasis necessarily in terms of the trading of the stocks today.
- [41:00]
Steve Liesman
I think the assessment of the president. By the way, nice of you to be silver lining. That's nice. And I think I'm generally silver lining on airlines, too. I also think lower fuel costs and I think what we've heard from a couple of them, including United and Delta especially, is that efficiency is the name or the game that I want to hear about when you get back to Americans numbers. This is certainly to me the least efficient of the carriers. This is the worst balance sheet of the carriers. This is the worst run of the carriers. And this was a company that here we go. The CASM was going higher and the RASM or the TRASM was going lower. In other words, cost per available seat mile expenses are going higher. Total revenue per available seat miles was disappointing, down 3% in the third quarter. It's not a good formula. So I think it's probably an overreaction on the headlines for these, these three. I think you can nibble on the best two airlines, but Delta would be the one I would nibble on. I actually think Delta should be trading higher in the current environment and they have not gone back to the highs the rest of the market has based upon the macro.
- [42:03]
Melissa Lee
All right, we've got some breaking news we want to get to on the Paramount Skydance merger. Julie Borson's got the latest. Julia, Melissa, big news here. The FCC has granted the approvals necessary to clear the Paramount Skydance merger. This is an $8 billion merger of Paramount Global with Skydance Media. This includes the transfer of 28 CBS owned local TV stations to the Skydance led group. Now, a couple of key things here. This comes after Skydance's Skydance made a commitment to have its to end its DEI policies and also to create a CBS News ombudsman. And this commitments were made in a pair of filings to the fcc, which is of course the one that just made this call here. So seemingly in reaction to those commitments, the deal has closed. And we will be back with more details. But it's been a long time coming. Expected to close earlier this year. And now finally this deal can move forward. Back over to you, Julia. Thanks, Julie Boorstin. Coming up, Chipotle shares dropping hard after last night's results. The metrics that had investors passing on the burrito bummer. That is next, more fast money into the. Welcome back to Fast Money. A burrito buzz kill for Chipotle shares sinking 13% their worst day since 2017. The fast casual chain yesterday missed revenue estimates. Cut its same store sales forecast. Other restaurant stocks like Kava Sweetgreen, Dutch Bros. Also sharply lower today. Dutch Bros. Did you ever get that?
- [43:37]
Mike Co
I didn't go.
- [43:38]
Melissa Lee
You're going to get it.
- [43:39]
Mike Co
I said I was going to go.
- [43:40]
Melissa Lee
You said you're going.
- [43:40]
Mike Co
And they were probably waiting for me. My local Chipotle. But I didn't make. Maybe I'll get there tonight real quick. You said you were the silver lining person. Brad Cooper. You're familiar with him? He was in Silver Linings Playbook. I know the show. He's also a big fan of CMG. Traded 7 times normal volume today.
- [43:57]
Guy Adami
Stop.
- [43:57]
Mike Co
Where we traded down to in March. I know valuation is concerned, but I think you could trade it from the long side here.
- [44:03]
Dan Nathan
By the way, he's making cheesesteaks in the East Village. Bradley Cooper.
- [44:06]
Melissa Lee
Are you serious?
- [44:07]
Dan Nathan
Now a truck. He's partnered with Angelo's, which is a Philly favorite. It's like Angelo Coop. You can go down and get one. You've got to wait in line like an hour.
- [44:15]
Melissa Lee
Well, you know, anyway, you have a trader now. Okay. Mike, you saw a lot of put activity in CMG?
- [44:21]
Guy Adami
Yeah. About 15 and a half times the average daily options volume. 240,000 put contracts. And the two most active contracts not expiring this week expire next week as the 46 and the 44 puts. But this is a Holley index name. If I offer Chipotle to my two teenage sons, they'd both be piling into the car and heading straight over. So I'm with Guy on this one.
- [44:42]
Melissa Lee
Sounds like $45 right there. Up next, final trades. Final trade time. 10.
- [44:56]
Steve Liesman
Yeah, I think Google is delivering on their AI and their Cloud capex. And I think you're buying those numbers, Mike.
- [45:03]
Guy Adami
UnitedHealth.
- [45:04]
Melissa Lee
Pyrite dog there, Dan.
- [45:08]
Dan Nathan
Intel. I'm with him. I'm not a buyer here. I want to hear strategy.
- [45:12]
Michael Kantopoulos
Good.
- [45:12]
Mike Co
You have fun.
- [45:12]
Melissa Lee
I mean, you have fun almost every night without fail.
- [45:15]
Mike Co
Any shows tomorrow that you're doing other than fast money?
- [45:18]
Melissa Lee
No.
- [45:18]
Michael Kantopoulos
That's good.
- [45:19]
Mike Co
I like it when it's just us. I also like the Gold Miners. Melissa that's gdx.
- [45:24]
Melissa Lee
Thanks for watching. Fast Mad Money with Jim Cramer starts right about now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their 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 Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.